This is the first longitudinal study to evaluate the relations between hemispheric laterality for emotion processing and the development of facial emotion recognition skills, both of which show similar developmental trajectories. Five to 12-year-old children (N = 160) completed an emotion discrimination task, emotion matching task, identity matching task, and behavioral lateralization for emotion processing task at baseline and one year later. Lateralization at baseline predicted later emotion discrimination, while change in strength of lateralization across the year predicted emotion matching ability. Lateralization was not a significant predictor of identity matching. These findings provide evidence that it is changes in laterality for emotion processing that contribute to improvements in facial emotion recognition skills between 5 and 12 years of age.