This study tested the hypotheses that (1) adolescents with cochlear implants (CIs) experience impaired spectral processing abilities, and (2) those impaired spectral processing abilities constrain acquisition of skills based on sensitivity to phonological structure but not those based on lexical or syntactic (lexicosyntactic) knowledge. To test these hypotheses, spectral modulation detection (SMD) thresholds were measured for 14-year-olds with normal hearing (NH) or CIs. Three measures each of phonological and lexicosyntactic skills were obtained and used to generate latent scores of each kind of skill. Relationships between SMD thresholds and both latent scores were assessed. Mean SMD threshold was poorer for adolescents with CIs than for adolescents with NH. Both latent lexicosyntactic and phonological scores were poorer for the adolescents with CIs, but the latent phonological score was disproportionately so. SMD thresholds were significantly associated with phonological but not lexicosyntactic skill for both groups. The only audiologic factor that also correlated with phonological latent scores for adolescents with CIs was the aided threshold, but it did not explain the observed relationship between SMD thresholds and phonological latent scores. Continued research is required to find ways of enhancing spectral processing for children with CIs to support their acquisition of phonological sensitivity.