Concern for the impact of prenatal cocaine exposure (PCE) on human language development is based on observations of impaired performance on assessments of language skills in these children relative to non-exposed children. We investigated the effects of PCE on speech processing ability using event-related potentials (ERPs) among a sample of adolescents followed prospectively since birth. This study presents findings regarding cortical functioning in 107 prenatally cocaine-exposed (PCE) and 46 non-drug-exposed (NDE) 13-year-old adolescents. PCE and NDE groups differed in processing of auditorily presented non-words at very early sensory/phonemic processing components (N1/P2), in somewhat higher-level phonological processing components (N2), and in late high-level linguistic/memory components (P600). These findings suggest that children with PCE have atypical neural responses to spoken language stimuli during low-level phonological processing and at a later stage of processing of spoken stimuli. (Contains 1 table and 1 figure.)