In research on language development by bilingual children, the early language environment is commonly characterized in terms of the relative amount of exposure a child gets to each language based on parent report. Little is known about how absolute measures of child‐directed speech in two languages relate to language growth. In this study of 3‐year‐old Spanish‐English bilinguals (n = 18), traditional parent‐report estimates of exposure were compared to measures of the number of Spanish and English words children heard during naturalistic audio recordings. While the two estimates were moderately correlated, observed numbers of child‐directed words were more consistently predictive of children's processing speed and standardized test performance, even when controlling for reported proportion of exposure. These findings highlight the importance of caregiver engagement in bilingual children's language outcomes in both of the languages they are learning. This research compared reported estimates of Spanish‐English language exposure with those based on naturalistic recordings in 3‐year old bilingual children. While moderately correlated, reported exposure failed to capture some variability in the number of child‐directed words that children were observed to hear in each language. Moreover, observed estimates more consistently predicted children's outcomes than reported estimates. This figure plots the time course of spoken language processing, indicating faster processing speed in children who heard more vs. less child‐directed speech in (a) Spanish and (b) English. Our results revealed important parallels between monolingual and bilingual language development and suggest that caregiver talk supports the development of language knowledge and also tunes up critical information‐processing skills that are fundamental for language and cognitive growth.