Previous research on typically developing children has shown that their memory for events depends on how they are encoded. As children grow older, they start to mention causal and temporal relationships between events, including psychological causes. Children with specific language impairment (SLI) were studied to disentangle the effects of syntactic skill and non-verbal IQ on event encoding and recall. Children with receptive SLI (SLI-R; N=34) had a significant discrepancy between non-verbal IQ and scores on a receptive language measure. Those with expressive SLI (SLI-E; N=29) did not have significant receptive impairment, but had low scores on at least one expressive language test. Controls were 32 typically developing children of similar age and non-verbal IQ. Children were shown two sequences of photographs, and in each case, were asked first to describe the story, and then, without warning, to recall it after a delay of 30-40 minutes. Compared with controls, children with SLI recalled significantly less story material. For the SLI-E group, poor recall was totally accounted for by poor initial encoding of the story content. However, for the SLI-R group, story memory was poor even after adjusting for amount of information in the initial narrative. Description and recall of the story ideas were related to use of complex syntax, and failure to use cognitive state terms predicted poor recall. We conclude that use of complex syntax and causal concepts are more important than non-verbal IQ in determining children's event memory.