Purpose: The major goal of this study was to specify the developmental trajectories for phonics and early text comprehension skills of children from kindergarten through third grade. Method: Data from the Early Childhood Longitudinal Study (N = 12,261) were used in this study. The participants were divided into 3 school readiness groups based on an assessment of literacy skill development at the time of entrance into kindergarten. The different groups were tracked on phonics and text comprehension development through the third grade. Results: Students in the average and high literacy readiness groups achieved high scores in decoding (phonics) by the end of the first grade. Students in the low readiness group did not match these scores until the third grade. Although the phonics gap was essentially closed in the third grade, a second, very significant text comprehension gap was exposed. The 3 readiness groups were analyzed to assess the relative contributions of parent education, income, and kindergarten literacy score to third-grade literacy achievement. Clinical Implications: The results of this study stress the need for speech-language pathologists to assess emergent literacy skills in their speech and language clients and to include appropriate literacy goals in the treatment regimen as a means for reducing the potential need for identification as learning disabled in reading in the later years of elementary school.