Purpose: The authors investigated the importance of phonemic length discrimination ability on reading and spelling skills among children with reading disabilities and familial risk for dyslexia and among children with typical reading skills, as well as the role of prereading skills in reading and spelling development in children with reading disabilities. Method: Finnish children with reading disabilities and discrimination problems (RDDP, "n" = 13), children with reading disabilities and typical discrimination abilities (RDTD, "n" = 27), and children with typical reading skills (TR, "n" = 140) were assessed between the ages of 1 and 6.5 years for language, phonological awareness, IQ, verbal memory, and rapid automatized naming. IQ, discrimination ability, and reading and spelling skills were assessed in the second grade. Statistical differences were examined at the group level. Results: The RDDP group was poorer in spelling accuracy compared with the other groups. The RDDP group's prereading skills were poorer than those of the RDTD group. In regression analyses, the RDDP group's poor spelling skills were partially explained by their discrimination ability. Conclusion: Prereading skills are connected to poor reading skills, but phonemic length discrimination ability plays a critical role in spelling accuracy problems among children with reading disabilities and with familial risk for dyslexia.