This paper presents a study of children's use of fingerspelling. It is part of a larger longitudinal ethnographic study of deaf children, who were 3-6 years old when the study started. They are early signers using Swedish Sign Language in communication with teachers and peers. The aim of this paper is to examine the different functions which fingerspelling has as a part of literacy learning in the early years and later at school. Six main themes are identified when the children first explore and learn to fingerspell: (i) exploring handshapes, letters, inventing fingerspelling, and later exploring its use and learning to fingerspell in literacy practices; (ii) exploring the direction of writing and fingerspelling; (iii) practising and memorizing words; (iv) decoding words; (v) recalling from memory; and (vi) fingerspelling as a tool for exploring the relationships; between letters, words, signs, mouth movements, and voice. These aspects of children's fingerspelling and their possible implications are addressed, as are some findings regarding how teachers respond to the children's attempts at fingerspelling.