It is widely agreed that poor reading and spelling performances in individuals with developmental dyslexia underlie problems with processing phonetic units. According to recent child and adult data, such processing deficits likely are the consequence of compromised low-level auditory processing. A possible causal relationship can be explored by testing infants based on their familial risk of dyslexia. Using magnetoencephalography, the study at hand investigates low-level auditory processing in infants at risk for dyslexia across 6 and 12 months of age—a sensitive period in early language development when the auditory system specializes in native phoneme perception. Results showed smaller and shorter neural responses to simple sounds in at-risk infants at 6 than at 12 months, a pattern that was reversed in age-matched typically developing infants. This interaction was significant both when fitting equivalent current dipoles and when using distributed source modeling and localized to left temporal and left frontal brain regions, indicating its potential impact on early language learning. In addition, atypical auditory responses in at-risk infants consistently predicted later language skills, such as syntactic processing and word production, thus identifying a possible biomarker of dyslexia in the infant brain.