Infants’ ability to recognize words in continuous speech is vital for building a vocabulary. We here examined the amount and type of exposure needed for 10-month-olds to recognize words. Infants first heard a word, either embedded within an utterance or in isolation, then recognition was assessed by comparing event-related potentials to this word versus a word that they had not heard directly before. Although all 10-month-olds showed recognition responses to words first heard in isolation, not all infants showed such responses to words they had first heard within an utterance. Those that did succeed in the latter, harder, task, however, understood more words and utterances when re-tested at 12 months, and understood more words and produced more words at 24 months, compared with those who had shown no such recognition response at 10 months. The ability to rapidly recognize the words in continuous utterances is clearly linked to future language development.