This study compared magnetoencephalographic (MEG) imaging-derived indices of auditory and somatosensory cortical processing in children aged 8-12 years with autism spectrum disorder (ASD; N = 18), those with sensory processing dysfunction (SPD; N = 13) who do not meet ASD criteria, and typically developing control (TDC; N = 19) participants. The magnitude of responses to both auditory and tactile stimulation was comparable across all three groups; however, the M200 latency response from the left auditory cortex was significantly delayed in the ASD group relative to both the TDC and SPD groups, whereas the somatosensory response of the ASD group was only delayed relative to TDC participants. The SPD group did not significantly differ from either group in terms of somatosensory latency, suggesting that participants with SPD may have an intermediate phenotype between ASD and TDC with regard to somatosensory processing. For the ASD group, correlation analyses indicated that the left M200 latency delay was significantly associated with performance on the WISC-IV Verbal Comprehension Index as well as the DSTP Acoustic-Linguistic index. Further, these cortical auditory response delays were not associated with somatosensory cortical response delays or cognitive processing speed in the ASD group, suggesting that auditory delays in ASD are domain specific rather than associated with generalized processing delays. The specificity of these auditory delays to the ASD group, in addition to their correlation with verbal abilities, suggests that auditory sensory dysfunction may be implicated in communication symptoms in ASD, motivating further research aimed at understanding the impact of sensory dysfunction on the developing brain.