Background: Tamil is a member of the Dravidian language family, and it is spoken extensively in several South Asian countries, including India, Sri Lanka, Malaysia and Singapore. The phonological development of Tamil-speaking children is examined in the current study within the context of lexical development by including children with typical language development (TD) and late talkers (LTs). The current study was conducted amongst Tamil-speaking children in Tamil Nadu, a southern state of India. Aims: The study aimed to compare the size and nature of the phonetic inventory, the proportion of consonants, vowels and syllable structure types amongst Tamil-speaking children with TD and LTs around 24 months. Methods and Procedures: The study included 68 Tamil-speaking children, comprising 34 LTs and 34 age- and gender-matched TD children. All children were born preterm and were assessed after their second birthdays as per their adjusted age for prematurity (M = 24.38 months; SD = 1.45). Language samples were recorded during free play and interaction with the caregiver. The transcription of children's spontaneous speech was subjected to independent analyses of speech to derive the phonological characteristics. Outcomes and Results: LTs produced a significantly lower phonetic inventory (Mdn = 8.5) than TD children (Mdn = 15.5). Only consonants /p/ and /m/ were produced by 90% of Tamil-speaking LTs. In comparison, 90% of TD children produced a wide range of consonants over different manners of articulation, including nasals, semi-vowels and stops. Tamil's retroflex consonants and geminate clusters emerged early in TD children's productions; fricatives and affricates were limited. LTs produced a significantly higher proportion of front vowels and a significantly lower proportion of mid- and back vowels than TD children. Syllable structures produced by LTs predominantly consisted of monosyllables and reduplicated syllables compared to TD children's wide range of complex structures. Conclusions and Implications: The data contribute to an emerging database on early phonological development in Tamil as spoken in Tamil Nadu, India. Observations from 2-year-old LTs and TD children speaking Tamil revealed similarities with English (bilabials, alveolar stops, disyllable and monosyllable production) and differences in line with distinct phonological characteristics of Tamil (lesser production of fricatives, back vowels and closed syllables). The study provides clinical information relevant to the assessment and intervention of young children with phonological and lexical delays.