Auditory processing and spoken word recognition difficulties have been observed in Specific Language Impairment (SLI), raising the possibility that auditory perceptual deficits disrupt word recognition and, in turn, phonological processing and oral language. In this study, fifty-seven kindergarten children with SLI and fifty-three language-typical age-matched controls were assessed with a speech-gating task to measure spoken word recognition, psychophysical tasks to measure auditory Frequency Modulation (FM) detection and Frequency Discrimination (FD), and standardized psychometric tests of phonological processing and oral language. As a group, children with SLI took significantly longer than language-typical controls to recognize words with high neighborhood density, perhaps reflecting subpar phonological representations. FM, but not FD, was significantly worse in SLI. However, while both poorer speech-gating performance and poorer auditory thresholds (FM) were evident in SLI, spoken word recognition did not mediate any relation between auditory perception and either phonological processing or oral language.