The relation of lexical and grammatical knowledge is at the core of many controversies in linguistics and psycholinguistics. Recent empirical findings that the two are highly correlated in early language development have further energized the theoretical debate. Behavioural genetics provides an illuminating new tool to explore this question, by addressing the question of whether the empirical correlation simply reflects the fact that environments which facilitate one aspect of language growth also facilitate the other, or whether the same underlying acquisition mechanisms, influenced by the same genes, are responsible for the correlation. We explored this issue in a study of 2898 pairs of two-year-old twins born in England and Wales. Language development was assessed by their parents using an adapted version of the MacArthur Communicative Development Inventory which assesses vocabulary and grammar. Moderate heritabilities were found for both. As in previous studies, measures of vocabulary and sentence complexity were substantially correlated (r = 0·66). Behaviour-genetic modelling of the relation of vocabulary and grammar produced an estimated value of 0·61 for the genetic correlation, a measure of the overlap of the genetic effects that contribute to the two aspects of language development. In contrast, a measure of nonverbal cognitive development, the PARCA, was only weakly correlated at both the phenotypic level and at the level of genetic correlations with the language measures. Thus, although the distinction between verbal and nonverbal skills has a genetic basis underlying the phenotypic dissociation, there is little evidence either genetically or phenotypically for a dissociation between vocabulary and grammar within language.