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This study examined the interaction between speech perception and sentential context among 13 poor readers and 49 good readers in grades one to three. Children's performance was examined on tasks assessing expressive and receptive vocabulary, reading skill, phonological awareness, pseudoword repetition, and phoneme identification. Good readers showed clearly defined categorical perception in the phoneme identification task for both sentence frames biased to the identification of the /b/ or /p/ phoneme. The /b/–/p/ category boundary for the BATH frame was at longer voice onset times (VOTs) than the boundary for PATH frame. Poor readers showed less sharply defined categorical perception with both sentence frames. Although poor readers did not show a shift in the /b/–/p/ category boundary, sentential context did affect the overall rate with which phonemes were identified as /b/ or /p/ at each VOT …