This study investigates associations between trajectories of children’s vocabulary development and subsequent behavioral and emotional difficulties via two potential mediating mechanisms; literacy and peer problems. Nationally representative data from 4,983 Australian children were used to examine trajectories of receptive vocabulary (4–5, 6–7, and 8–9 years) and hyperactivity-inattention, conduct problems and emotional symptoms (8–9, 10–11, 12–13, 14–15 years), and literacy and peer problems (8–9 years). Lower growth in vocabulary was related to trajectories of hyperactivity-inattention, conduct problems, and emotional symptoms. Literacy was a key mediator explaining these associations. Results were consistent for children below the 50th percentile for vocabulary at 4–5 years compared to the full sample. These findings suggest that early literacy-based interventions may alleviate declining academic, emotional and behavioral functioning in adolescence.