Characterization of language in naturalistic settings in autism spectrum disorder has been lacking, particularly at young ages, but such information is important for parents, teachers, and clinicians to better support language development in real-world settings. Factors contributing to this lack of clarity include conflicting definitions of language abilities, use of non-naturalistic standardized assessments, and restricted samples. The current study examined one of the largest datasets of naturalistic language samples in toddlers with autism spectrum disorder, and language delay and typically developing contrast groups at age 3. A range of indices including length of phrase, grammatical markings, and social use of language was assayed during a naturalistic observation of a parent--child play session. In contrast to historical estimates, results indicated only 3.7% of children with autism spectrum disorder used no words, and 34% were minimally verbal. Children with autism spectrum disorder and language delay exhibited similar usage of grammatical markings, although both were reduced compared to typically developing children. The greatest difference between autism spectrum disorder and language delay groups was the quantity of social language. Overall, findings highlight a range of language deficits in autism spectrum disorder, but also illustrate that the most severe level of impairments is not as common in naturalistic settings as previously estimated by standardized assessments.