The acquisition of reading skills is known to rely on early phonological abilities, but only a few studies have investigated the independent contribution of the different steps involved in phonological processing. This 1-year longitudinal study, spanning the initial year of reading instruction, aimed at specifying the development of phonological discrimination, awareness and various aspects of phonological memory and at assessing their respective contributions to early reading acquisition. Our results show an increase in performance at each phonological processing step, but also suggest a qualitative evolution in their relative importance. Hierarchical regression analyses indicate that reading skills are mainly predicted by phonological awareness measured at the kindergarten stage and, subsequently, by phonological memory abilities measured at the end of first grade. More precisely short-term memory for serial-order information seems to contribute to the development of decoding abilities, while phonological knowledge stored in long-term memory seems to influence word recognition.