Language development, including literacy learning (reading and writing) was studied in a first grade classroom in a culture-in-contact situation. The language behavior of three boys--one mainstream culture member, another from black inner-city culture, and a third from Appalachian culture--and the language of a teacher from mainstream culture were analyzed according to qualitative methods including discourse analysis and analyses of responses in reading groups, responses to procedures such as M. Clay's "Concepts About Print Survey," and the students' talk about reading and writing in interviews. Preliminary findings indicated that the children had learned many of the rules of classroom discourse, including those used in literacy teaching and learning, and were becoming literate. However, some cultural differences in language interaction and literacy learning were found. The findings suggest that educators need to develop an understanding of language interaction and learning patterns of oral cultures in the United States and that a variety of assessment techniques in reading are needed to measure learning in that area. (Author/FL)