Increasing evidence suggests that prenatal exposure to opioids can adversely influence brain development, yet, limited data exists on the effects of opioid-exposure on preschool language development. Our study aimed to characterize the nature and prevalence of language problems in children prenatally exposed to opioids, and the factors that support or hinder language acquisition. A sample of 100 children born to pregnant women in methadone maintenance treatment and 110 randomly identified non-exposed children were studied from birth to age 4.5 years. At 4.5 years, 89 opioid-exposed and 103 non-exposed children completed the preschool version of the Clinical Evaluation of Language Fundamentals (CELF-P) as part of a comprehensive neurodevelopmental assessment. Children prenatally exposed to opioid had poorer receptive and expressive language outcomes at age 4.5 years compared to non-exposed children. After adjustment for child sex, maternal education, other pregnancy substance use, maternal pregnancy nutrition and prenatal depression, opioid exposure remained a significant independent predictor of children’s total CELF-P language score. Examination of a range of potential intervening factors showed that a composite measure of the quality of parenting and home environment at 18 months and early childhood education participation at 4.5 years were important positive mediators.