This article presents a longitudinal study of the early literacy development of 47 children with speech difficulties from ages 4 to 7 years. Of these children, 19 with specific speech difficulties were compared with 19 children with speech and language difficulties and 19 normally developing controls. The risk of literacy difficulties was greater in the group with speech and language difficulties, and these children displayed deficits in phoneme awareness at 6 years. In contrast, the literacy development of children with isolated speech problems was not significantly different from that of controls. A path analysis relating early speech, language, and literacy skills indicated that preschool language ability was a unique predictor of phoneme awareness at 5;8 (years; months), which, together with early reading skill, predicted literacy outcome at 6;9. Once the effects of phoneme awareness were controlled, neither speech perception nor speech production processes predicted variation in literacy skills. However, it is noteworthy that children with persisting speech difficulties at 6;9 were particularly vulnerable to deficits in reading-related processes.KEY WORDS: phonological difficulties, phoneme awareness, reading, speech production, language impairment