The relation of otitis media with effusion (OME) and associated hearing loss to language and cognitive skills at 1 year of age was studied to determine whether OME-related hearing loss had a direct association with language and cognitive outcomes at 1 year of age or an indirect association with these outcomes, as mediated by the child-rearing environment. Subjects were 61 black infants attending community-based child care programs. The presence of OME was assessed biweekly from 6 to 12 months of age by otoscopy and tympanometry. Hearing was assessed with visual reinforcement audiometry when children were well and when ill with OME. Language and cognitive skills and the child-rearing environment at home and in child care were examined. The results indicated a modest correlation between hearing loss associated with OME and receptive language. However, the direct association between OME-related hearing loss and all the language and cognitive measures was negligible. Hearing loss had an indirect association with receptive and expressive language, cognitive development, and overall communication as mediated by child-rearing factors. That is, children with more frequent hearing loss tended to have less responsive mothers and home environments, and this association was linked to lower performance on the infant assessments.