Deficits in phonological skills appear to be at the heart of reading disability; however, the nature of this impairment is not yet known. The hypothesis that dyslexic subjects are impaired in auditory frequency discrimination was tested by using an attention-independent auditory brain potential, termed mismatch negativity (MMN) while subjects performed a visual distractor task. In separate blocks, MMN responses to graded changes in tone frequency or tone duration were recorded in 10 dyslexic and matched control subjects. MMN potentials to changes in tone frequency but not to changes in tone duration were abnormal in dyslexic subjects. This physiological deficit was corroborated by a similarly specific impairment in discriminating tone frequency, but not tone duration, which was assessed separately. Furthermore, the pitch discrimination and MMN deficit was correlated with the degree of impairment in phonological skills, as reflected in reading errors of regular words and nonwords. It is possible that in dyslexia a persistent sensory deficit in monitoring the frequency of incoming sound may impair the feedback control necessary for the normal development of phonological skills. Ann Neurol 1999;45:495–503