The present study evaluated the efficacy of a new preschool early literacy intervention created specifically for deaf and hard-of-hearing (DHH) children with functional hearing. Teachers implemented "Foundations for Literacy" with 25 DHH children in 2 schools (intervention group). One school used only spoken language, and the other used sign with and without spoken language. A "business as usual" comparison group included 33 DHH children who were matched on key characteristics with the intervention children but attended schools that did not implement "Foundations for Literacy." Children's hearing losses ranged from moderate to profound. Approximately half of the children had cochlear implants. All children had sufficient speech perception skills to identify referents of spoken words from closed sets of items. Teachers taught small groups of intervention children an hour a day, 4 days a week for the school year. From fall to spring, intervention children made significantly greater gains on tests of phonological awareness, letter-sound knowledge, and expressive vocabulary than did comparison children. In addition, intervention children showed significant increases in standard scores (based on hearing norms) on phonological awareness and vocabulary tests. This quasi-experimental study suggests that the intervention shows promise for improving early literacy skills of DHH children with functional hearing.