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Using a phonological discrimination paradigm, we show that the brain responses of 4-week-old infants systematically vary as a function of biological sex and testosterone level. Females who are generally low on testosterone demonstrated a clear phonological discrimination effect with a bilateral distribution. In male infants this effect systematically varied as a function of testosterone level. Males with high testosterone showed no discrimination effect, whereas males with low testosterone displayed a discrimination effect, which was clearly left-lateralized. The present data provide evidence for a strong influence of testosterone on language function and lateralization already present during the first weeks of life.