A longitudinal study called The Home-School Study of Language and Literacy Development examined the relationships between the kinds of talk that children experience at home and school at ages 3 and 4 and measures of literate abilities at age 5. Subjects, 87 children in 2 cohorts of 42 and 45 children from low-income families living in the Boston, Massachusetts area, were audiotaped during specific verbal interactions. Home visits took place when the children were age 3 and again at age 4: subjects were audiotaped as they interacted with their mothers at home and with their peers and teachers at school. Transcripts were coded for specific kinds of talk. Subjects took a battery of standardized tests at the end of their kindergarten year. Results indicated that: (1) the predictive power for later vocabulary development shifted between ages 3 and 4 from the child's ability to produce more sophisticated language at home and school to richness of talk within the environment at home and school; (2) a similar age-related shift occurred for the story comprehension measure; (3) home factors did not show predictive power for children's abilities to define a series of words; and (4) the kinds of talk that require children to remove themselves from the immediate context of interaction were essential to the development of literacy and language skills. Findings demonstrate the complementary nature of home and school factors as they influence children's early language environments. (Thirteen tables of data are included; 33 references are attached.) (RS)