Phonological awareness (PA), the core contributor in phoneme processing abilities, has a link to later reading skills in children. However, the associations between PA and neural auditory discrimination are not clear. We used event-related potential (ERP) methodology and neuropsychological testing to monitor the neurocognitive basis of phonological awareness in typically developing children. We measured 5–6-year-old children's (N=70) phoneme processing, word completion and perceptual reasoning skills and compared their test results to their brain responses to phonemic changes, separately for each test. We found that children performing better in Phoneme processing test showed larger mismatch negativity (MMN) responses than children scoring lower in the same test. In contrast, no correspondence between test scores and brain responses was found for Auditory closure. Thus, the results suggest that automatic auditory change detection is linked to phoneme awareness in preschool children.