A study investigated the individual and interactive effects of both context and familiarity on the reading comprehension of both native English and English as a second language (ESL) readers to see if these two components of background knowledge would interact, and if so, how. Context or lack of it was defined by the presence or absence of a title and picture page. In order to manipulate familiarity, three different texts were constructed. Text A was intended to be familiar to few readers, Text B, to a good number, and Text C, to all readers. Three groups of university students participated in the study: 36 native speakers of English, 50 advanced learners of ESL, and 26 high-intermediate learners of ESL. Findings indicate that native speakers utilize context as part of a processing strategy to make cognitive predictions of what a text is going to be about as it is being read. Nonnative speakers do not process a text in this way. Furthermore, ESL readers do not have a good sense of how difficult a passage is for them; native speakers do have this sense. Results suggest that even advanced ESL readers appear to be linguistically bound to the text; they do not use their background knowledge to interact with the text and so to construct meaning. The appendix contains the three texts used in the study. (Author/AMH)