A descriptive study examined: the relative influence of native language (L1) literacy skills and second language (L2) oral proficiency on students' ability to read and spell in the second language. A second dimension of the study examined students' second language misspellings in order to identify examples of positive and negative transfer of L1 spelling knowledge. Pretests in reading, oral language, and spelling in L1 (Spanish) and L2 (English) were administered to 48 second- and third-grade students in a transitional bilingual education program. Samples of English spelling were collected for 20 weeks. The English spelling test was readministered as a posttest. Information on demographics and the nature of the instructional program was collected to facilitate comparison to other populations of second language learners. Results indicate that L1 literacy skill and L2 oral skill made equal and separate contributions to L2 literacy learning. Phonological knowledge of L1 spelling was found to transfer only positively. By contrast, subjects' conceptual understanding of L1 spelling was found to transfer in both positive and negative ways. (Author/MSE)