Prediction error plays a pivotal role in theories of learning, including theories of language acquisition and use. Researchers have investigated whether and under which conditions children, like adults, use prediction to facilitate language comprehension at different levels of linguistic representation. However, many aspects of the reciprocal relation between prediction error and the development of language learning remain unclear. In this article, we review studies in language development that can inform us about the role of prediction error in updating, learning, and retrieving linguistic information. We argue that the study of individual differences in linguistic and cognitive skills will help the field understand more thoroughly whether, when, and why prediction aids language learning, and whether prediction error necessarily results in language learning and retrieval from memory. We close with a discussion of the needs and challenges for researchers to answer these questions.