The performance of 26 children (3;0-4;0 years) who were born before 32 weeks gestation was compared with the performance of 26 full-term children on a range of short-term memory and language measures. The measures tested vocabulary, expressive language, phonological short-term memory, and general nonverbal ability. Preterm children scored more poorly across the full range of measures. The mildly depressed performance of the preterm group on the short-term memory and language measures was attributable to the large deficits on these tests shown by a subgroup of approximately one third of preterm children identified as being "at risk" for persisting language difficulties using the Bus Story Test (Bishop & Edmundson, 1987). The findings indicate that preterm birth and associated hazards may constitute a significant risk factor for specific language impairment in a sizable minority of children.