We tested categorical perception and speech-in-noise perception in a group of five-year-old preschool children genetically at risk for dyslexia, compared to a group of well-matched control children and a group of adults. Both groups of children differed significantly from the adults on all speech measures. Comparing both child groups, the risk group presented a slight but significant deficit in speech-in-noise perception, particularly in the most difficult listening condition. For categorical perception a marginally significant deficit was observed on the discrimination task but not on the identification task. Speech parameters were significantly related to phonological awareness and low-level auditory measures. Results are discussed within the framework of a causal model where low-level auditory problems are hypothesized to result in subtle speech perception problems that might interfere with the development of phonology and reading and spelling ability.