Behavioural and electrophysiological studies give differing impressions of when auditory discrimination is mature. Ability to discriminate frequency and speech contrasts reaches adult levels only around 12 years of age, yet an electrophysiological index of auditory discrimination, the mismatch negativity (MMN), is reported to be as large in children as in adults. Auditory ERPs were measured in 30 children (7 to 12 years), 23 teenagers (13 to 16 years) and 32 adults (35 to 56 years) in an oddball paradigm with tone or syllable stimuli. For each stimulus type, a standard stimulus (1000 Hz tone or syllable [ba]) occurred on 70% of trials, and one of two deviants (1030 or 1200 Hz tone, or syllables [da] or [bi]) equiprobably on the remaining trials. For the traditional MMN interval of 100–250 ms post-onset, size of mismatch responses increased with age, whereas the opposite trend was seen for an interval from 300 to 550 ms post-onset, corresponding to the late discriminative negativity (LDN). Time-frequency analysis of single trials revealed that the MMN resulted from phase-synchronization of oscillations in the theta (4–7 Hz) range, with greater synchronization in adults than children. Furthermore, the amount of synchronization was significantly correlated with frequency discrimination threshold. These results show that neurophysiological processes underlying auditory discrimination continue to develop through childhood and adolescence. Previous reports of adult-like MMN amplitudes in children may be artefactual results of using peak measurements when comparing groups that differ in variance.