Two groups of children with moderate bilateral sensorineural hearing loss were studied. Tests of reading and underpinning skills were administered. Comparisons were made with normally hearing children of the same age. While reading levels were found to be similar to their hearing peers, the phonological awareness and receptive vocabularies of the hearing impaired children were found to be more like younger normally hearing children. Further, contrary to much evidence from studies of normally hearing children, the hearing impaired children's reading was not found to be correlated with their performance in measures of phonological awareness. On the basis of these findings, some conjectures are offered about the role of vocabulary knowledge in the development of phonological awareness and reading.