Purpose: Verbal working memory in children with cochlear implants and children with normal hearing was examined. Participants: Ninety-three fourth graders (47 with normal hearing, 46 with cochlear implants) participated, all of whom were in a longitudinal study and had working memory assessed 2 years earlier. Method: A dual-component model of working memory was adopted, and a serial recall task measured storage and processing. Potential predictor variables were phonological awareness, vocabulary knowledge, nonverbal IQ, and several treatment variables. Potential dependent functions were literacy, expressive language, and speech-in-noise recognition. Results: Children with cochlear implants showed deficits in storage and processing, similar in size to those at second grade. Predictors of verbal working memory differed across groups: Phonological awareness explained the most variance in children with normal hearing; vocabulary explained the most variance in children with cochlear implants. Treatment variables explained little of the variance. Where potentially dependent functions were concerned, verbal working memory accounted for little variance once the variance explained by other predictors was removed. Conclusions: The verbal working memory deficits of children with cochlear implants arise due to signal degradation, which limits their abilities to acquire phonological awareness. That hinders their abilities to store items using a phonological code.