The nonword repetition (NWR) test has been shown to be a good predictor of children's vocabulary size. NWR performance has been explained using phonological working memory, which is seen as a critical component in the learning of new words. However, no detailed specification of the link between phonological working memory and long-term memory (LTM) has been proposed. In this paper, we present a computational model of children's vocabulary acquisition (EPAM-VOC) that specifies how phonological working memory and LTM interact. The model learns phoneme sequences, which are stored in LTM and mediate how much information can be held in working memory. The model's behaviour is compared with that of children in a new study of NWR, conducted in order to ensure the same nonword stimuli and methodology across ages. EPAM-VOC shows a pattern of results similar to that of children: performance is better for shorter nonwords and for wordlike nonwords, and performance improves with age. EPAM-VOC also simulates the superior performance for single consonant nonwords over clustered consonant nonwords found in previous NWR studies. EPAM-VOC provides a simple and elegant computational account of some of the key processes involved in the learning of new words: it specifies how phonological working memory and LTM interact; makes testable predictions; and suggests that developmental changes in NWR performance may reflect differences in the amount of information that has been encoded in LTM rather than developmental changes in working memory capacity.