Speech recognition in normal-hearing adults is affected by pragmatic restrictions on the target content. For example, masked sentence recognition is better when target speech is composed of semantically meaningful compared to anomalous sentences. Similarly, masked word recognition is better when assessed in a close-set than an open-set task, even after accounting for changes in chance performance; this effect is most pronounced when the response alternatives in the closed-set task are acoustically distinct. In both the cases, restricting the set of plausible responses reduces the fidelity of acoustic cues necessary to perform the task. Although young school-age children benefit from this type of context, the magnitude of benefit relative to that observed for adults depends on the masker type. The benefit associated with increasingly restricted response alternatives is similar for young children and adults when the masker is noise, but young children derive little or no benefit when the masker is two-talker speech. Children and adults also differ with respect to the benefit of semantic context for sentences presented in noise or two-talker speech. Potential factors responsible for these developmental effects will be discussed, including maturation of auditory stream segregation, working memory, and acoustic/phonetic templates supporting word recognition.