The Hebb repetition paradigm has recently attracted attention as a measure of serial order learning, which underlies word-form learning abilities. Although children are good vocabulary learners, it is surprising that previous Hebb learning studies with young children show rather weak Hebb effects. In this study, we conducted two experiments to identify developmental factors that drive an increase of the size of the Hebb effect in young children. Motivated by evidence from adult work, we focused on an ability to group a sequence into consistent subsequences and on phonological short-term memory (STM) capacity. In Experiment 1 (N = 98), it was shown that 3- to 5-year-old children with high phonological STM capacity showed a Hebb effect, particularly in the later experimental trials. In Experiment 2 (N = 97), temporal grouping of the sequences in 2-2 subsequences further encouraged children with high phonological STM capacity to show the Hebb effect even in the earlier experimental trials and children with low STM capacity to show a trend toward a Hebb effect in the later trials. Moreover, across Experiments 1 and 2 we found robust evidence of transfer of the Hebb effect to recall of new sequences that partially overlapped in item-by-item pairings with the Hebb sequence, indicating that children use consistent grouping strategies when learning above-span Hebb sequences. These findings indicate that phonological STM, grouping consistency, and their interaction are developmental requirements for the Hebb effect to emerge.