Sensory gating represents the nervous system's ability to inhibit responding to irrelevant environmental stimuli. In order to characterize the early development of acoustic sensory gating, suppression of auditory evoked potential component P1 (i.e. P50) in response to paired clicks was measured during REM sleep in healthy infants (1-4 months) that were without genetic risk for disrupted sensory gating function (i.e. having a relative with schizophrenia). As a group, the subjects exhibited significant response suppression. A correlation between increasing age and stronger response suppression was uncovered, even within this restricted age range. Parallel changes in sleep physiology could not be ruled out as the explanation for this change. Nevertheless, these results demonstrate that the neural circuits underlying sensory gating are functional very early in postnatal development.