This research investigated the link between oral narrative and reading skills in the first 3 years of reading instruction. Study 1 consisted of 61 children (M = 6:1 years) who had experienced 1 year of reading instruction on average. Children's story retelling was scored for memory and narrative quality. The quality of children's narratives correlated positively with their reading skill at this age, but narrative quality did not uniquely predict their reading skill 1 year later. Study 2 consisted of 39 children (M = 7:0 years) who had experienced 2 years of reading instruction on average. At this age, the quality of children's narratives uniquely predicted their reading skill concurrently and 1 year later, even after controlling for their receptive vocabulary and early decoding. These findings have implications for theories of the oral language foundations of reading and for assessment in the early years of reading instruction.