While the known health impacts of sedentary lifestyles have focused attention on children's outdoor activity, the development of their physical literacy -- the physiological, social, cultural, cognitive, expressive, and psychological dimensions of their physicality -- is much less in focus. Developing children's physical literacy is embedded in the Early Years Learning Framework and Primary curriculum: Health and Physical Education, and the performing arts subjects within The Arts. This study asks "How well prepared are pre-service teachers to implement a program that contributes to developing children's physical literacy?" This mixed methods study includes an environmental scan of BEd courses at 12 Australian universities; and at one university, a content analysis of units, a review of 227 students' practicum records, and an online survey of 57 pre-service teachers. The study finds that pre-service teachers are generally well-informed, committed and confident but have limited diagnostic and practical pedagogical skills to effectively develop children's physical literacy.