Three issues were examined in a study of children's use of first language knowledge in acquiring a second language: (1) understanding of narratives, (2) the degree to which knowledge available in the child's first language is used in understanding second language input, and (3) the relationship between knowledge utilization in two languages as children become bilingual and acquire more literacy skills. Selections from "Aesop's Fables" were used for a series of comprehension studies involving a variety of students in kindergarten through grade 5. The data from the experiment are discussed with reference to two issues: the relationship between comprehension of Spanish language input and English language input by students exposed to both languages, and the relationship between students dealing with both languages as compared with students dealing only with English during elementary school. The three aspects of comprehension tested were story recall, ability to answer why-questions, and ability to generalize or give the moral of the story. The data indicate that once basic skills are acquired in the first language, they are utilized in the second language. A further study is outlined which will deal with skills needed in the passage from narrative to expository text comprehension. (AMH)