One of the first steps infants take in learning their native language is to discover its set of speech-sound categories. This early development is shown when infants begin to lose the ability to differentiate some of the speech sounds their language does not use, while retaining or improving discrimination of language-relevant sounds. However, this aspect of early phonological tuning is not sufficient for language learning. Children must also discover which of the phonetic cues that are used in their language serve to signal lexical distinctions. Phonetic variation that is readily discriminable to all children may indicate two different words in one language but only one word in another. Here, we provide evidence that the language background of 1.5-year-olds affects their interpretation of phonetic variation in word learning, and we show that young children interpret salient phonetic variation in language-specific ways. Three experiments with a total of 104 children compared Dutch- and English-learning 18-month-olds' responses to novel words varying in vowel duration or vowel quality. Dutch learners interpreted vowel duration as lexically contrastive, but English learners did not, in keeping with properties of Dutch and English. Both groups performed equivalently when differentiating words varying in vowel quality. Thus, at one and a half years, children's phonological knowledge already guides their interpretation of salient phonetic variation. We argue that early phonological learning is not just a matter of maintaining the ability to distinguish language-relevant phonetic cues. Learning also requires phonological interpretation at appropriate levels of linguistic analysis.