This study analyzed phonological short-term memory (PSTM) and working memory (WM) and their relationship with vocabulary and grammar learning in an artificial foreign language. Nonword repetition, nonword recognition, and listening span were used as memory measures. Participants learned the singular forms of vocabulary for an artificial foreign language before being exposed to plural forms in sentence contexts. Participants were tested on their ability to induce the grammatical forms and to generalize the forms to novel utterances. Individual differences in final abilities in vocabulary and grammar correlated between 0.44 and 0.76, depending on the measure. Despite these strong associations, the results demonstrated significant independent effects of PSTM and WM on L2 vocabulary learning and on L2 grammar learning, some of which were mediated by vocabulary and some of which were direct effects.