Speech sounds convey relatively slow Amplitude Modulation cues whose processing plays a crucial role for speech comprehension. However, the development of AM processing and its interaction with speech intelligibility remains unclear. Previous studies suggested that AM processing development relates to changes in the central filtering of AM cues or in 'processing efficiency' (i.e., a reduction in internal noise and/or improvements in the optimality of decision making). Here, we explored the contribution of (i) the ability to combine AM cues over time (temporal integration), (ii) response consistency for AM detection, on children's in-noise consonant discrimination. Temporal integration developed until 11 years. Response consistency in AM detection also increased with age. Temporal integration at higher AM rates and AM detection consistency were statistically related to identification thresholds in noise for a subset of the tested consonants. Children vocabulary was not a better predictor of speech intelligibility compared to the measures of AM processing. Overall, the development of AM processing and its interaction with speech intelligibility may result from changes in (central) processing efficiency for AM.