Objective The aim of the research was to investigate auditory processing abilities in children with reading disorders using electrophysiological and behavioral tasks. Methods Differences in auditory processing between control, compensated (age appropriate reading skills with a history of reading disorder), and reading disordered groups were systematically investigated. Results The reading disorder group had significantly lower results than control and compensated reader groups for most tests in the reading and auditory processing test battery. All children with a reading disorder did not pass at least one behavioral test of auditory processing, and hence would be diagnosed clinically as having an auditory processing disorder (APD). The reading disorder group also had significantly smaller /ga/-evoked mismatch negativity (MMN) area than the control group. Compensated and control groups had similar results for the electrophysiological and behavioral auditory processing tests. Correlation analyses showed that reading fluency and accuracy and nonword scores (measured using Castle and Coltheart's word/nonword test) correlated significantly with most APD measures. Conclusions The general profile of auditory processing deficits in children with reading disorder was a combination of deficits on frequency patterns (i.e. frequency pattern test) and absent or small /ga/-evoked MMN. Significant results from the correlation analyses support the co-morbidity of reading and auditory processing disorders. Significance Children with reading disorders are likely to have auditory processing disorders.