Twenty-five learning-disabled and 25 normal first-grade-age children took a phonemic discrimination test that manipulated word-pairs systematically according to degree of phonetic difference, position of phoneme contrast, and lexical familiarity. Results indicated that (1) the significantly lower performance of the learning-disabled to children as a group was due to the impaired performance by a small subgroup, (2) all three stimulus variables had significant effects on performance, (3) all combinations of stimulus variables interacted significantly, and (4) discrimination performance did not correlate with measures of receptive vocabulary or reading achievement for either group.