In this paper we consider the nature and consequences of the development of phonological skills in children. We begin with evidence for developmental refinements in phonological processes. These developments, in turn, affect a variety of other skills. We consider two particular examples: the relationship between the development of speech skills and verbal short-term memory and the development of children's phonological awareness. The development of phonological awareness is related to the acquisition of literacy, which, in turn, brings about further refinements in phonological skills.