OBJECTIVE: The goal of the current study was to identify neurophysiological indices of binaural processing in children with no history of hearing loss or listening problems. The results will guide our efforts to diagnose children for whom impaired binaural processing may contribute to difficulty understanding speech in adverse listening environments. Our main aim was to document the cortical auditory evoked potentials (AEPs) in response to interaural intensity differences (IIDs) in children. It is well known, however, that the morphology of AEPs is substantially different in children and adults. Comparison of AEPs in response to IIDs between children and adults allowed us to evaluate age-related differences in the AEP waveform of binaural processing. DESIGN: Nine children (ages 7 yr 0 mo to 9 yr 4 mo) and 11 adults (23 to 34 yr) with normal hearing and no known or suspected neurological or academic problems listened to click stimuli under earphones. Click trains consisted of broadband noise of 1-msec duration with a click rate of 100 Hz. In the experimental condition (IID-present) 50-msec intervals containing an interaural intensity difference of 20 dB were introduced periodically in the continuous stream of otherwise diotic click trains. The diotic trains alternated in intensity between 50 and 70 dB peSPL. In the baseline condition (IID-absent), the same continuous diotic click stream utilized in the IID-present condition was presented with no IID. Finally, for comparison with existing literature on AEPs in children and adults, we presented monaural click trains of 50-msec duration, like those used in the IID stimulus (but with no continuous stream) to the left ear at 70 dB peSPL, with an interstimulus interval of 750 msec. Stimuli were presented in separate blocks for each stimulus type and AEPs were recorded in a passive listening condition. RESULTS: A prominent AEP activation was present in both age groups for the IID-present condition; the IID-absent condition did not evoke substantial AEPs. Adult waveform characteristics of the AEPs to monaural clicks and IID-present around 100 and 200 msec were comparable to previous reports. The children demonstrated the expected AEP activation patterns in response to monaural clicks (i.e., positivity around 100 msec, followed by prominent negativity around 250 msec); however their AEP waveforms to IIDs were mainly comprised of a prolonged positivity around 200 to 250 msec after stimulus onset. A two-step temporal-spatial Principal Component Analysis (PCA) was used to evaluate the temporal (time) and spatial (electrode location) composition of the AEP waveforms in children and adults in response to IID-present and IID-absent conditions. Separate repeated-measures ANOVAs with factor scores as the dependent variable were conducted for each temporal factor (TF) representing the waveform deflections around 100, 200 and 250 msec (i.e., TF110, TF200, and TF255) at the frontocentral spatial factor (SF1). Significantly greater negative activation was observed in adults than in children in response to IID-present for TF110. The IID-present condition evoked a significantly greater waveform inflection for TF200 in both age groups than IID-absent. A positive going activation for TF255 was observed in the IID-present condition in children but not in adults. CONCLUSIONS: This study compared obligatory AEPs in response to binaural processing of IIDs in children and adults with normal hearing. The morphology of the AEP waveform in children was different for monaural clicks and IID-present stimuli. The difference between AEPs for monaural clicks and IID-present did not occur in adults. It is likely that polarity reversal of the AEPs in response to the IID accounts for the observed AEP morphology in children.