Background: Only a small number of longitudinal studies have been conducted to assess the literacy skills of children with hearing impairment. The results of these studies are inconsistent with regard to the importance of phonology in reading acquisition as is the case in studies with hearing children. Colin, Magnan, Ecalle, and Leybaert (2007) revealed the important role of early phonological skills and the contribution of the factor of age of exposure to Cued Speech (CS: a manual system intended to resolve the ambiguities inherent to speechreading) to subsequent reading acquisition (from kindergarten to first grade) in children with deafness. The aim of the present paper is twofold: (1) to confirm the role of early exposure to CS in the development of the linguistic skills necessary in order to learn reading and writing in second grade; (2) to reveal the possible existence of common factors other than CS that may influence literacy performances and explain the inter-individual difference within groups of children with hearing impairment. Method: Eighteen 6-year-old hearing-impaired and 18 hearing children of the same chronological age were tested from kindergarten to second grade. The children with deafness had either been exposed to CS at an early age, at home and before kindergarten (early-CS group), or had first been exposed to it when they entered kindergarten (late-CS group) or first grade (beginner-CS group). Children were given implicit and explicit phonological tasks, silent reading tasks (word recognition and sentence comprehension), word spelling, and vocabulary tasks. Results: Children in the early-CS group outperformed those of the late-CS and beginner-CS groups in phonological tasks from first grade to second grade. They became better readers and better spellers than those from the late-CS group and the beginner-CS group. Their performances did not differ from those of hearing children in any of the tasks except for the receptive vocabulary test. Thus early exposure to CS seems to permit the development of linguistic skills necessary in order to learn reading and writing. The possible contribution of other factors to the acquisition of literacy skills by children with hearing impairment will be discussed. (Contains 9 figures and 5 tables.)