Functional connectivity is the statistical association of neuronal activity time courses across distinct brain regions, supporting specific cognitive processes. This coordination of activity is likely to be highly important for complex aspects of cognition, such as the communication of fluctuating task goals from higher-order control regions to lower-order, functionally specific regions. Some of these functional connections are identifiable even when relevant cognitive tasks are not being performed (i.e. at rest). We used magnetoencephalographic recordings projected into source space to demonstrate that resting state networks in childhood have electrophysiological underpinnings that are evident in the spontaneous fluctuations of oscillatory brain activity. Using the temporal structure of these oscillatory patterns we were able to identify a number of functional resting state networks analogous to those reported in the adult literature. In a second analysis we fused this dynamic temporal information with the spatial information from a functional magnetic resonance imaging analysis of functional connectivity, to demonstrate that inter-subject variability in these electrophysiological measures of functional connectivity is correlated with individual differences in cognitive ability: the strength of connectivity between a fronto-parietal network and lower-level processing areas in inferior temporal cortex was associated with spatial working memory capacity, as measured outside the scanner with educationally relevant standardized assessments. This study represents the first exploration of the electrophysiological mechanisms underpinning resting state functional connectivity in source space in childhood, and the extent to which the strength of particular connections is associated with cognitive ability.