This longitudinal study examined the relationship between schooling, literacy development, and socioeconomic context, as reflected by a composite measure of socioeconomic status (SES). Reading, spelling, and phonological abilities were assessed from kindergarten to grade three in Canadian children in a school district with intensive literacy activities. In kindergarten, there were significant associations between SES and all the abilities assessed but these associations declined systematically to non-significant levels by grade three. Risk and prevalence of reading failure also decreased with more schooling. The results suggest that the attenuation of the association between SES and literacy-related skills, and the progressive reduction of the risk for reading failure, were positive outcomes associated with the literacy school program, especially in the early grades.