Fifty preterm children who had experienced a range of biological hazards were divided into two competence groups on the basis of their receptive language development at 24 months. The groups were then compared in terms of the kinds of caregiver-child interactions the children and their primary caregivers engaged in three months earlier in a laboratory assessment. The two language skill groups did not differ on perinatal factors such as birth weight and gestational age, or on length of hospitalization, but did differ in social transactions. The more competent group as compared to the less competent group had caregivers who were more stimulating, the children themselves emitted more vocalization, and the caregivers and children engaged in more reciprocal social transactions.