In 1981, sign language was declared an official language in communication with and education ofdeaf children in Sweden. Today, the debate is focused on language communication for hard of hearing children. In order to describe patterns of interaction between hard of hearing and deafchildren as well as between hard ofhearing children, a longitudinal, qualitative study was conducted. Twenty-seven children, .2 and 7 years of age, participated. Fifteen were deaf, twelve hard of hearing. Video-recorded observations were made at three daycare centres during a two year period.Observations were made in natural interactional settings. The results showed that the use of a language code that was easy for the children to produce as well as to perceive enabled them not only to take part in dialogues and to share experiences with others, but also had positive consequences for their playas well as their social and emotional development. A child-centered and supportive communicative style of the adults, in combination with a positive attitude towards fantasy and role plays seemed to promote the children's overall development, as contrasted to an adult-centered and directive communicative style where language per se was infocus.