This comparative study examines the role of contextual features embedded in a dialogic environment in fostering literacy. The study, implemented by language arts teachers in a middle school setting, investigates the effectiveness of an instructional program designed to create a collaborative dialogic learning environment that imparts literacy. The program is compared to a traditional learning environment in which reading and writing are imparted through direct teacher instruction. Results indicate that embedding literacy instruction in communities of discourse is superior to traditional methods in fostering reading comprehension and writing competence. Findings suggest that a dialogic environment creates the context within which students develop cognitive tools to achieve literacy. (Contains 2 tables and 2 figures.)