Background: German children do not formally learn letter-sounds before school entry. In this study, we evaluated kindergarten children's sensitivity to the frequency of letters and visually similar symbols in child-directed texts, how it develops and whether it predicts early reading abilities. Method: In a longitudinal study from kindergarten to primary school, children were asked to judge whether a presented alphabetic (e.g., A) or non-alphabetic symbol (e.g., #) was a letter. High and low frequency was varied for both types of symbols. Furthermore, we analysed whether later reading abilities were predicted by this letter judgement ability. Results: Before school entry, children had difficulties in distinguishing frequent non-alphabetic symbols from letters. Furthermore, letter judgement in kindergarten predicted reading abilities in first grade. Conclusions: Children derive some knowledge about letters from the frequency of co-occurrence of letters and symbols in texts. The ability to distinguish letters from non-alphabetic symbols predicts early reading.