The main aim of this study was to investigate the impact of formal teacher competence on pupils' reading achievement. The data comes from the Swedish participation in PIRLS 2001 in grade 3. Information was obtained from pupils (n = 5271) and teachers (n = 351). The analyses were conducted using 2-level structural equation modeling. Teacher competence was operationalized with multiple observed indicators and defined as a latent variable. Two measures of achievement were used: PIRLS 2001 reading test results and teacher judgement of pupil performance in the Swedish language. The results reveal that teacher competence was positively and similarly related to both achievement measures. No selection effects in terms of pupil socioeconomic status were found. The current study provides evidence for a strong impact of teacher competence on pupil reading achievement.