This study examines 16-month-olds' understanding of word order and inflectional properties of familiar nouns and verbs. Infants preferred grammatical sentences over ungrammatical sentences when the ungrammaticality was cued by both misplaced inflection and word order reversal of nouns and verbs. Infants were also sensitive to inflection alone as a cue to grammaticality, but not word order alone. The preference for grammatical sentence forms was also disrupted when adjacent function word cues were removed from the stimuli, and when familiar content words were replaced by nonce words. These results suggest that sensitivity to the relationship between functional morphemes and content words, rather than sensitivity to either independently, drives the development of early grammatical knowledge. Furthermore, infants showed some ability to generalize from familiar to nonce content word contexts.