The purpose of this study was to identify possible age-related changes in vowel perception and to assess lexical influences on both children's and adults' perception. More specifically, we sought to evaluate two proposals regarding the development of speech categories - namely, the category expansion and category definition hypotheses (e.g., Flege, 1992). In Experiment 1, 5-yr-old, 9-yr-old and adult monolingual, native speakers of English identified vowels from two synthetic continua in the nonword context /h_b/. Vowels on the "native" continuum ranged from English /I/ to /i/; those on the "foreign" continuum ranged from English /I/ to an unfamilar, foreign vowel /Y/. Young children's phoneme boundary extended further away from the /I/ endpoint on the foreign continuum than did older children's and adults' - a result opposite to that predicted by the category expansion hypothesis. However, in support of the category definition hypothesis, an age-related increase in the slopes of subjects' identification functions was observed, especially for the native continuum. In Experiment 2, the same vowel stimuli were presented in the contexts /b_b/ and /b_p/ to 5-yr-olds, 9-yr-olds and adults; thus, one endpoint for the native /I-i/ continua always formed a word (viz, "bib" or "beep"), whereas, for the foreign /I-Y/ continua, the only word endpoint was "bib". It was again found that young children's phoneme boundary extended further away from the /I/ endpoint, when this vowel was not bounded by another native vowel. In addition, the slopes of their identification functions were steeper, and thus more like those of older listeners, especially when the endpoint stimuli were real words. The results suggest that despite similarities in the extent of native vowel categories for young and older listeners, young children's categories are still quite flexible. Moreover, developmental differences in how sharply defined category boundaries are may depend, in part, on variations in lexical knowledge. © 1999 Academic Press.