Face perception is considered a remarkable visual ability in humans, which is subject to a prolonged developmental trajectory. In response to the COVID-19 pandemic, mask-wearing has become mandatory for adults and children alike. However, previous research indicates its adverse effects on face recognition abilities in adults. The current study sought to explore the effect of masks on face processing abilities in school-age children given that face perception is not fully developed in this population. To this end, children (n = 72, ages 6-14 years old) completed the Cambridge Face Memory Test – Kids (CFMT-K), a validated measure of face perception performance. Faces were presented with or without masks and across two orientations (upright/inverted). The inclusion of face masks led to a profound deficit in face perception abilities. This decrement was more pronounced in children compared to adults, despite adjustment of task difficulty across the two age groups. Additionally, children exhibited reliable correlations between age and the CFMT score for upright faces for both the mask and no-mask conditions. Finally, as previously observed in adults, children also showed qualitative changes in the processing of masked faces. Specifically, holistic processing, a hallmark of face perception, was disrupted for masked faces, as suggested by a reduced face-inversion effect. Together, these findings provide evidence for substantial quantitative and qualitative alterations in the processing of masked faces in school-age children.