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A growing number of studies have shown a connection between rhythmic processing and language skill. It has been proposed that domain-general rhythm abilities might help children to tap into the rhythm of speech (prosody), cueing them to prosodic markers of grammatical (syntactic) information during language acquisition, thus underlying the observed correlations between rhythm and language. Working memory processes common to task demands for musical rhythm discrimination and spoken language paradigms are another possible source of individual variance observed in musical rhythm and language abilities. To investigate the nature of the relationship between musical rhythm and expressive grammar skills, we adopted an individual differences approach in N = 132 elementary school-aged children ages 5–7, with typical language development, and investigated prosodic perception and working memory skills as possible mediators. Aligning with the literature, musical rhythm was correlated with expressive grammar performance (r = 0.41, p < 0.001). Moreover, musical rhythm predicted mastery of complex syntax items (r = 0.26, p = 0.003), suggesting a privileged role of hierarchical processing shared between musical rhythm processing and children’s acquisition of complex syntactic structures. These relationships between rhythm and grammatical skills were not mediated by prosodic perception, working memory, or non-verbal IQ; instead, we uncovered a robust direct effect of musical rhythm perception on grammatical task performance. Future work should focus on possible biological endophenotypes and genetic influences underlying this relationship.