Evidence suggests that children with selective mutism (SM) display significant aberrations in auditory efferent activity at the brainstem level that may underlie inefficient auditory processing during vocalization, and lead to speech avoidance. The objective of the present study was to explore auditory filtering processes at the cortical level in children with SM. The classic paired-click paradigm was utilized to assess suppression of the P50 event-related potential to the second, of two sequentially-presented clicks, in ten children with SM and 10 control children. A significant suppression of P50 to the second click was evident in the SM group, whereas no suppression effect was observed in controls. Suppression was evident in 90% of the SM group and in 40% of controls, whereas augmentation was found in 10% and 60%, respectively, yielding a significant association between group and suppression of P50. P50 to the first click was comparable in children with SM and controls. The adult-like, mature P50 suppression effect exhibited by children with SM may reflect a cortical mechanism of compensatory inhibition of irrelevant repetitive information that was not properly suppressed at lower levels of their auditory system. The current data extends our previous findings suggesting that differential auditory processing may be involved in speech selectivity in SM.