Auditory scene analysis begins in infancy, making it possible for the baby to distinguish its mother's voice from other noises in the environment. Despite the importance of this process for human behavior, the question of how perceptual sound organization develops during childhood is not well understood. The current study investigated the role of attention for perceiving sound streams in a group of school-aged children and young adults. We behaviorally determined the frequency separation at which a set of sounds was detected as one integrated or two separated streams and compared these measures with passively and actively obtained electrophysiological indices (mismatch negativity (MMN) and P3b) of the same sounds. In adults, there was a high degree of concordance between passive and active electrophysiological indices of stream segregation that matched with perception. In contrast, there was a large disparity in children. Active electrophysiological indices of streaming were concordant with behavioral measures of perception, whereas passive indices were not. In addition, children required larger frequency separations to perceive two streams compared to adults. Our results suggest that differences in stream segregation between children and adults reflect an under-development of basic auditory processing mechanisms, and indicate a developmental role of attention for shaping physiological responses that optimize processes engaged during passive audition.