Thai, a tonal language, has its own distinctive alphabetic orthography. The study investigates reading and spelling development in Thai children, with an aim of examining the grain size that is predominantly used when reading and spelling. Furthermore, word and nonword lists were developed to examine the acquisition of the complex system of vowels and tone rules in Thai. Reading and spelling of words and nonwords were assessed in 60 Thai children ranging in age from 7 to 9 years 8 months from Grade(s) 1, 2, and 3. A lexicality effect was found for both reading and spelling. Spelling lagged behind reading in the Grade 1 children. Development rapidly increased between the youngest Grade 1 children and the older Grade 2 and 3 children. For word reading there were significantly more lexical errors than phonological errors. Beginning readers appear to predominantly use a larger lexico-syllabic grain size to read Thai.