Although the relationship between language and intellectual development in children is often ambiguous, language retardation appears to be one of the main ways that a disadvantaged environment hinders achievement. While American research has indicated that nursery education may effectively extend language experience, few studies have been done in England to investigate how much early social experience can influence a child's intellectual functioning by way of his development and use of language. The present longitudinal study established four groups of 3-year-olds matched for intelligence and sex by crossing the two variables of home background and nursery school experience. Children's speech was recorded in a natural setting session. Complex operations were then run on the data and the different groups were compared on such aspects of their language as representation, information loss, anaphoric and exophoric use of pronouns, mean length of utterances, complexity, noun-verb phrase indices, and function. These comparisons demonstrated the superior development of the environmentally favored group over the unfavored group, and while a few cases showed the nursery group's superiority to the no-nursery group, the results were less clear. (MH)