This paper reports on a study of the purposes for literacy discernible in young children's use of the virtual world, "Club Penguin." Twenty-six children aged between 5 and 11 took part in semi-structured interviews in which their use of virtual worlds was explored. Further, three 11-year-old children were filmed using "Club Penguin" four times each over the period of 1 month in their own homes and they and their parents took part in interviews regarding their use of this virtual world. Findings indicate that the purposes for literacy in virtual worlds such as these are varied and have much in common with purposes for literacy in the off line world. The virtual world "Club Penguin" provided a motivating and enjoyable context for reading and writing and enabled the construction and maintenance of online social networks. The implications for research, policy and practice are discussed.