Purpose Previous studies of neural processing of rhyme discrimination in 7- to 8-year-old children who stutter (CWS) distinguished children who had recovered, children who had persisted, and children who did not stutter (CWNS; Mohan & Weber, 2015). Here, we investigate neural processing mediating rhyme discrimination for early acquired real words in younger CWS and CWNS (4;1-6;0 years;months), when rhyming abilities are newly emerging, to examine possible relationships to eventual recovery (CWS-eRec) and persistence in stuttering (CWS-ePer). Method Children performed a rhyme discrimination task while their event-related brain potentials were recorded. CWNS, CWS-eRec, and CWS-ePer had similar speech and language abilities. Inclusionary criteria incorporated at least 70% accuracy for rhyme discrimination. Analyses focused on the mean amplitude of the N400 component elicited by rhyming and nonrhyming words in anterior and posterior regions of interest. Results CWNS, CWS-eRec, and CWS-ePer displayed a classic event-related potential rhyme effect for rhyme discrimination characterized by larger amplitude, posteriorly distributed N400s elicited by nonrhyming targets compared to rhyming targets. CWNS displayed a more robust anterior rhyme effect compared to the CWS groups with a larger amplitude N400 anteriorly for the rhyming targets. This effect was more consistent across individual CWNS than CWS. Conclusions The groups of CWNS, CWS-eRec, and CWS-ePer, who had all developed rhyming discrimination abilities, exhibited similar underlying neural processes mediating phonological processing of early acquired words for the classic central-parietal rhyme effect. However, individual variability of the anterior rhyme effect suggested differences in specific aspects of phonological processing for some CWS-eRec and CWS-ePer compared to CWNS.