The speech young children hear is highly variable. For example, reduced pronunciations, where some sounds in the canonical pronunciation are naturally dropped or altered, are common even in speech to children. The present study employed a new story-guided looking method (a variation on language-guided looking) to create felicitous conditions for testing young children’s recognition of reduced pronunciations of familiar words. Experiment 1 (18-24 months, n=32) found that toddlers succeeded at recognizing clear pronunciations, but failed to recognize reduced pronunciations, even in repetition trials when target words were preceded by a clear mention of the same word in the previous sentence. In Experiment 2, 3-year-olds (35-39 months, n=17 out of 44 pre-registered, ongoing) succeeded at recognizing reduced pronunciations, and benefited from preceding repetition. Overall, these results demonstrate a powerful new method for studying children’s language comprehension under more naturalistic conditions, and highlight an important psycholinguistic development over the 2–3 year span.