Background: The aim of the present study was twofold: 1) to determine whether phonological skills measured in deaf prereaders predict their later phonological and reading skills after one year of reading instruction as is the case for hearing children; 2) to examine whether the age of exposure to a fully specified phonological input such as Cued Speech may explain the inter-individual differences observed in deaf children's phonological and word recognition levels. Method: Twenty-one 6-year-old deaf prereaders and 21 hearing children of the same chronological age performed two phonological tasks (rhyme decision and generation tasks); they were re-assessed 12 months later and presented with other phonological tasks (rhyme decision and common unit identification tasks) and a written word choice test. Results: Phonological skills measured before learning to read predicted the written word recognition score the following year, both for hearing and for deaf participants. Age of onset of exposure to Cued Speech was also a strong predictor of phonological and written word recognition scores in beginning deaf readers. Conclusions: The evidence broadly supports the idea of a capacity for acquiring phonological skills in deaf children. Deaf children who are able to develop an implicitly structured phonological knowledge before learning to read will be better readers when this knowledge becomes explicit under the pressure of reading instruction.