Crosslinguistic transfer in bilingual language acquisition has been widely reported in various linguistic domains (e.g., Dopke, 1998; Nicoladis, 1999; Paradis, 2001). In this study we examined structural overlap (Dopke, 2000; Muller and Hulk, 2001) and dominance (Yip and Matthews, 2000) as explanatory factors for crosslinguistic transfer in Persian-English bilingual children's production of novel compound words. Nineteen Persian monolinguals, sixteen Persian-English bilinguals, and seventeen English monolinguals participated in a novel compound production task. Our results showed crosslinguistic influence of Persian on English and of English on Persian. Bilingual children produced more right-headed compounds in Persian, compared with Persian monolinguals, and in their English task, they produced more left-headed compounds than English monolinguals. Furthermore, Persian-dominant bilinguals tended more towards left-headed compounds in Persian than the English-dominant group. These findings point to both structural overlap and language dominance as factors underlying crosslinguistic transfer.