The effects of congenital, unilateral, focal brain lesions on early linguistic development and hemispheric lateralization for language were investigated longitudinally in 24 preschool children with hemiplegia(14 males, 10 females), 12 with left hemisphere damage (LHD) and 12 with right hemisphere damage (RHD). A comprehensive linguistic assessment was performed at 2 and 3 years of life; cerebral lateralization for language was measured by the Fused Dichotic Words Listening Test. An early left-side specificity for language was indicated by the presence of lexical and grammatical delay in most children with LHD. In the dichotic listening test all 12 children with LHD showed a shift of language lateralization from the left to the right hemisphere. Atypical lateralization coefficients (lambda), i.e. values falling more than two standard deviations from the mean of a normative sample, were associated with a delay in lexical and grammatical development, especially after LHD. In addition, cortical–subcortical–periventricular lesions rather than solely periventricular damage, and larger lesions rather than small, were associated with the most atypical lateralization coefficients, irrespective of lesion side. Results of this study suggest that language and lateralization data are closely related and that reallocation of language functions in alternative regions of the brain has a cost in terms of a slow rate of language acquisition.