Error detection is one of the functions of the executive attention network, a brain system involved in executive control that includes the anterior cingulate cortex and other prefrontal regions. Despite the key role of this function in a wide range of life outcomes, very limited research has examined the early development of the network and whether its functional efficacy is related to environmental factors. Electrophysiological studies with adults have shown oscillatory activity in theta (4–7 Hz) range arising from medial frontal cortex that follows the detection of self‐committed or observed errors. In the current study, we designed a novel experimental procedure that involved a familiarization phase with simple three‐pieces puzzles followed by an experimental phase in which toddlers observed the puzzles being formed either correctly or incorrectly. Observation of incorrect configurations produced increased potentials in midline channels and greater power theta activity for both toddlers (n = 56) and adults (n = 14). In addition, socioeconomic status of the family in general, and parental education in particular, contributed to individual differences in the amplitude of the error‐related signal and associated theta power in toddlers, indicating that children raised in lower SES families show poorer activation of the executive attention network. These data demonstrate the influence of environmental factors at the earliest stages of development of the executive attention network. Importantly, the results show that error‐detection EEG signals can be used as neural markers of the initial development of executive attention, which can be of great help for the early detection of risk for developmental disorders involving deficits in this function. Toddlers show brain responses to observed errors characterized by a burst of frontal activation in theta frequency. This error‐related response is considered an early functional marker of the executive attention network and, already at this young age, is partially predicted by familial socio‐economic status.