This study investigated whether Korean children understand the internal structure of compound words in Korean and English and whether there is a relationship between their performance in tasks that measure their understanding of the morphological structure of compounds in Korean and English. This study also examined the effects of gender, grade, and verbal ability on the performance of the Korean and English tasks. 106 primary school children completed a Korean and English compound task, which consisted of 32 compound test items in Korean and in English respectively. Each compound task included 16 comprehension test items and 16 production test items. Half of them were real words and the other half were pseudo words. The structures of the compounds were noun-noun or noun-verb. Korean task scores made a significant contribution to predicting English test scores after controlling for gender, grade, and verbal ability. It is concluded that L1 task performance can be a significant factor in L2 task performance, supporting evidence that L1 morphological awareness is transferable to L2 morphological processes. From a pedagogical perspective, research findings will be useful for teachers when designing compound tasks to develop Korean children's morphological awareness for language and literacy development in English.