Children show remarkable progress in word learning in the second year of life. This language growth coincides with the vocabulary spurt and the development of domain-general cognition, e.g., attention that facilitates perceptual processing. Evidence suggests that language growth depends on increasing processing efficiency and underlying neuronal specialization. We used magnetoencephalography (MEG) to characterize neural activity following familiar and unfamiliar words in 14-month-old infants and related measures of neural activity to prospective measures of vocabulary growth. MEG source modeling revealed a broadly distributed network in bilateral frontal, temporal and parietal cortex that distinguished word classes between 150–900 ms after word onset. Analysis of correlations between outcome measurements and strength of neural activity revealed that in the interval 150–300 ms after word onset, the magnitude of neural activation in the right inferior frontal cortex for familiar words was positively correlated with vocabulary size at 18, 21, 24, 27 and 30 months of age. We argue that increased activity to familiar words may reflect more efficient discriminatory processing by the most skilled language learners who develop a larger vocabulary one year later.Children show remarkable progress in word learning in the second year of life. This language growth coincides with the vocabulary spurt and the development of domain-general cognition, e.g., attention that facilitates perceptual processing. Evidence suggests that language growth depends on increasing processing efficiency and underlying neuronal specialization. We used magnetoencephalography (MEG) to characterize neural activity following familiar and unfamiliar words in 14-month-old infants and related measures of neural activity to prospective measures of vocabulary growth. MEG source modeling revealed a broadly distributed network in bilateral frontal, temporal and parietal cortex that distinguished word classes between 150–900 ms after word onset. Analysis of correlations between outcome measurements and strength of neural activity revealed that in the interval 150–300 ms after word onset, the magnitude of neural activation in the right inferior frontal cortex for familiar words was positively correla...