Purpose: The aim was to identify the source of idiom understanding difficulties in children with specific reading comprehension failure. Method: Two groups (Ns=15) of 9- to 10-year-olds participated. One group had age-appropriate word reading and reading comprehension; the other had age-appropriate word reading, but poor reading comprehension. Each child completed an independent assessment of semantic analysis skills and two multiple-choice assessments of idiom comprehension. In one, idiomatic phrases were embedded in supportive story contexts; in the other they were presented out of context. Performance on transparent idioms, which are amenable to interpretation by semantic analysis, and opaque idioms, which can only be interpreted by inference from context if the meaning is not known, was compared. Results: The groups demonstrated comparable semantic analysis skills and understanding of transparent idioms. Children with poor comprehension were impaired in the use of supportive context to aid their understanding of the opaque idioms. Conclusions: The study identifies poor inference from context as a source of the idiom understanding difficulties in children with poor reading comprehension; there was no evidence that poor semantic analysis skills contributed to their difficulties. Children with poor comprehension should be supported in the use of context to understand unfamiliar figurative language.