Eight to 11% of children have a clinical disorder in oral language (Developmental Language Disorder, DLD). Language deficits in DLD can affect all levels of language and persist through adulthood. Word-level processing may be critical as words link phonology, orthography, syntax and semantics. Thus, a lexical deficit could cascade throughout language. Cognitively, word recognition is a competition process: as the input (e.g., lizard) unfolds, multiple candidates (liver, wizard) compete for recognition. Children with DLD do not fully resolve this competition, but it is unclear what cognitive mechanisms underlie this. We examined lexical inhibition-the ability of more active words to suppress competitors-in 79 adolescents with and without DLD. Participants heard words (e.g. net) in which the onset was manipulated to briefly favor a competitor (neck). This was predicted to inhibit the target, slowing recognition. Word recognition was measured using a task in which participants heard the stimulus, and clicked on a picture of the item from an array of competitors, while eye-movements were monitored as a measure of how strongly the participant was committed to that interpretation over time. TD listeners showed evidence of inhibition with greater interference for stimuli that briefly activated a competitor word. DLD listeners did not. This suggests deficits in DLD may stem from a failure to engage lexical inhibition. This in turn could have ripple effects throughout the language system. This supports theoretical approaches to DLD that emphasize lexical-level deficits, and deficits in real-time processing.