Can emergent literacy impact the size of the linguistic units children attend to? We examined children's ability to segment multiword sequences before and after they learned to read, in order to disentangle the effect of literacy and age on segmentation. We found that early readers were better at segmenting multiword units (after controlling for age, cognitive, and linguistic variables), and that improvement in literacy skills between the two sessions predicted improvement in segmentation abilities. Together, these findings suggest that literacy acquisition, rather than age, enhanced segmentation. We discuss implications for models of language learning.