Two explanations for resolving dyslexia were investigated, one assuming resolving underlying deficits and another assuming compensatory mechanisms based on cognitive strengths. Thirty-six Dutch gifted secondary-school students with either persistent (n = 18) or resolving (n = 18) dyslexia participated. Groups, matched on IQ, were assessed on dyslexia- and intelligence-related cognitive risk and protective factors. Findings for the risk factors showed support for both the resolving-deficit and compensatory-mechanism theories: Resolving and persistent groups were comparable on phoneme deletion and nonalphanumeric rapid automatized naming, but resolvers outperformed students with persistent dyslexia on spoonerisms and alphanumeric rapid automatized naming. For the protective factors, resolvers consistently showed more pronounced cognitive strengths in verbal areas relevant for literacy development, which is in line with the compensatory-mechanism theory. We conclude that, besides underlying deficits resolving to some extent, compensation is a plausible explanation for resolving literacy difficulties in gifted students.