The present study addressed auditory processing in dyslexic 8-11-year old children by the means of event-related brain potentials (ERP). Cortical sound reception was evaluated by recording N250 responses to syllables and tones and cortical sound discrimination by analyzing the mismatch negativity (MMN) to syllable and tone changes. Furthermore, we assessed whether different diagnostic sub-groups of dyslexic individuals show different patterns of cortical activity. It was found that both cortical sound reception and sound discrimination was impaired in dyslexic children. The analysis of the data obtained from the two dyslexic sub-groups, Dyslexics-1 being impaired in non-word reading (or both non-word and frequent word reading) and Dyslexics-2 in frequent word reading but not in non-word reading, revealed that the MMN was specifically diminished in the latter group whereas it was normal-like in Dyslexics-1. However, no differences were found between these sub-groups in sound reception as suggested by the responses elicited by the standard stimuli. These results show that different diagnostic sub-groups of dyslexic individuals have different patterns of auditory processing deficits as suggested by similarly impaired sound reception in the two dyslexic groups and the sound-discrimination impairment specific to one of the groups. The results are discussed within the Functional Coordination Deficit model of dyslexia.