This article addresses whether phonological representation is an area of weakness for children with SLI and whether it contributes to their difficulty with grammatical morphemes. Bishop (1997) proposed that children with SLI form phonological representations more slowly than typically developing children. This hypothesis was investigated by exposing a group of children with SLI and a group of typically developing children, matched for language ability, to novel morphemes. Their ability to detect phonemic changes from the target morpheme was tested. Children with SLI were less able than typically developing children to detect changes when the morphemes were presented in nonfinal utterance positions. Hence, children with SLI were less able to form fully specified phonological representations of morphemes in conditions of low perceptual salience. The results are interpreted within a limited processing capacity framework.