Auditory vocal hallucinations (AVH) in general had limited functional impact in 7–8 year old children. However, transitory developmental expression of psychotic symptoms may become more persistent (and clinically relevant), depending on the degree of exposure to environmental risk factors. Therefore, in a five-year follow-up study of a case-control sample associations of (severity of) AVH with social adversity (traumatic experiences and stressful events) and the formation of delusional ideation were examined. In total 337 children (mean age 13.1 years; SD = 0.5) were reassessed. Forty children had continued to hear voices (24%, persistent group), 15 had heard voices for the first time (9%, incident group), 130 children no longer reported AVH (remitted group) and 152 never heard voices (referent group). Early social adversity was strongly associated with both incident and persistent AVH, and predicted greater AVH severity at follow-up. Children with both AVH and delusions were more likely to have experienced traumatic or stressful events than children with either symptom alone. AVH severity was shown to be a mediator in the association between TE (but not SE) and delusion formation. These results suggest that, although hearing voices in 7–8 year olds is in most cases benign, experience of social adversity can predict persistence and onset of new AVH closer to puberty. Given evidence for the association with delusion formation, they do pose a significant clinical risk.