The real-time lexical processing of children with specific language impairment (SLI) was examined, and the focus was to determine whether a temporal processing deficit or a general processing capacity deficit disrupts these children's lexical processing. A group of SLI children (mean age 8;3), a group of age-matched children (CA, mean age 8;1), and a group of receptive syntax-matched children (RS; mean age 6;7) completed a sentence processing task in which they monitored sentences for a target word appearing at the beginning, middle, or end of sentences. Sentences systematically varied with respect to containing either a high proportion of stop consonants (stop-loaded sentences) or a high proportion of nonstop consonants (nonstop-loaded sentences). Children also completed the Identification (ID) Speech Perception Task. On the sentence processing task, SLI children yielded significantly slower word recognition reaction time (RT) overall than both CA and RS controls. Sentence type had no effect on any subject group's RT. No Group × Sentence Type interaction was found. On the ID task, SLI children performed significantly worse than CA controls but similarly to RS children. No correlation was found between temporal processing and lexical processing (for either sentence type or sentences combined) for any group. The findings are interpreted to suggest that a general processing capacity limitation was responsible for the poor ID task performance and slower lexical processing of SLI children.