This study examined the ability of 20 preschool children with functional phonological delays and 34 age- and vocabulary-matched typical children to learn words differing in phonotactic probability (i.e., the likelihood of occurrence of a sound sequence) and neighborhood density (i.e., the number of words that differ from a target by one phoneme). Children were exposed to nonwords paired with novel objects in a story and learning was measured by a picture naming task. Results showed that both groups created lexical representations for rare sound sequences from sparse neighborhoods. However, only children with typical development appeared to build on this initial lexical representation to create a full representation of the word (i.e., lexical-semantic connection and semantic representation). It was hypothesized that creating a lexical representation may be too resource demanding for children with phonological delays, leaving few resources available to create a lexical-semantic connection and/or a semantic representation.