Abstract The aim of this study was to investigate the perception of competing speech stimuli in 3-, 4-, and 5-year-old normally developing children. A dichotic listening paradigm was used in which the temporal alignment between the two stimuli was varied to represent three levels of competition. Minimal, moderate, and maximal levels of temporal competition were represented by a Separation, Lag, and Simultaneous test condition, respectively. The subjects were behaviorally set to listen for and to report the two stimuli on each trial. The incidence of double correct responses in the test conditions was the measure of interest. The results show a sharp and linear drop in double correct scores from the Separation, to the Lag, and to the Simultaneous condition. There were no age-related differences in the Separation and the Simultaneous conditions. In the Lag condition, the performance of the 3-year-olds was significantly lower than the 4- and 5-year-olds. The findings were interpreted to be indicative of limited auditory processing ability in preschoolers for moderately and maximally competing speech stimuli.