Purpose: Reading comprehension is a key indicator of academic and psychosocial outcomes. Children with developmental language disorder (DLD) tend to find reading comprehension challenging. This study aimed to explore the literal and inferential (cohesive, elaborative, and lexical) comprehension of children with DLD, their typically developing (TD) peers, and, uniquely, a group of children with low language (LL) proficiency. Method: Children aged 10-11 years with either typical development (n = 16), LL proficiency (n = 14), or DLD (n = 14) were recruited from 8 primary schools. They completed a battery of standardized language and literacy assessments. Responses to literal and inferential questions on the Wechsler Individual Achievement Test-Second UK Edition (Wechsler, 2005) were analyzed. Results: A disproportionate difficulty in answering inferential relative to literal questions was found for the DLD group compared to the LL and TD groups. Children with DLD were significantly poorer at elaborative inferencing than both their peers with LL proficiency and TD peers, but there were no group differences in cohesive or lexical inferencing. There was a significant positive association between inferencing ability and vocabulary knowledge, single word reading accuracy, grammatical skill, and verbal working memory. The importance of single word reading accuracy was especially evident as a partial mediator of the relationship between vocabulary knowledge and inferencing ability. Conclusions: These results indicate that interventions targeting the reading comprehension of children with DLD should focus on elaborative inferencing skill. There are also clinical implications as the development of new standardized assessments differentiating between inference types is called for.