This study of tobacco exposure and auditory processes was conducted in a predominantly low-income population of 40 pregnant women and their newborns. Urinary cotinine concentrations and self-reported smoking status were obtained from the mother during the first prenatal care visit. Auditory brainstem-evoked responses (ABRs) were recorded in neonates to assess neuroelectrical activity of the auditory nerve following a sound stimulus. Infants of mothers with the highest cotinine concentrations (> 1,000 ng/ml) responded at a rate that was four times greater (hazard ratio 4.1, 95% confidence interval 1.4–11.5) than infants of non-smoking mothers (cotinine ≤ 15 ng/ml). Associations with more moderate cotinine concentrations (> 15–1,000 ng/ml) were not observed. Enhanced ABRs may disrupt auditory processes related to speech perception, negatively affecting reading and language development during childhood. The results suggest that tobacco exposure during pregnancy may impair auditory function.