Many children with autism spectrum disorders (ASD) demonstrate deficits in language comprehension, but little is known about how they process spoken language as it unfolds. Real‐time lexical comprehension is associated with language and cognition in children without ASD, suggesting that this may also be the case for children with ASD. This study adopted an individual differences approach to characterizing real‐time comprehension of familiar words in a group of 34 three‐ to six‐year‐olds with ASD. The looking‐while‐listening paradigm was employed; it measures online accuracy and latency through language‐mediated eye movements and has limited task demands. On average, children demonstrated comprehension of the familiar words, but considerable variability emerged. Children with better accuracy were faster to process the familiar words. In combination, processing speed and comprehension on a standardized language assessment explained 63% of the variance in online accuracy. Online accuracy was not correlated with autism severity or maternal education, and nonverbal cognition did not explain unique variance. Notably, online accuracy at age 5½ was related to vocabulary comprehension 3 years earlier. The words typically learned earliest in life were processed most quickly. Consistent with a dimensional view of language abilities, these findings point to similarities in patterns of language acquisition in typically developing children and those with ASD. Overall, our results emphasize the value of examining individual differences in real‐time language comprehension in this population. We propose that the looking‐while‐listening paradigm is a sensitive and valuable methodological tool that can be applied across many areas of autism research. Autism Res 2013, ●●: ●●–●●. © 2013 International Society for Autism Research, Wiley Periodicals, Inc.