This longitudinal study compared the development of oral language and more specifically narrative skills (storytelling and story retelling) in children with specific language impairment (SLI) with and without literacy delay. Therefore, 18 children with SLI and 18 matched controls with normal literacy were followed from the last year of kindergarten (mean age = 5 years 5 months) until the beginning of grade 3 (mean age = 8 years 1 month). Oral language tests measuring vocabulary, morphology, sentence and text comprehension and narrative skills were administered yearly. Based on first and third grade reading and spelling achievement, both groups were divided into a group with and a group without literacy problems. Results showed that the children with SLI and literacy delay had persistent oral language problems across all assessed language domains. The children with SLI and normal literacy skills scored also persistently low on vocabulary, morphology and story retelling skills. Only on listening comprehension and storytelling, they evolved towards the level of the control group. In conclusion, oral language skills in children with SLI and normal literacy skills remained in general poor, despite their intact literacy development during the first years of literacy instruction. Only for listening comprehension and storytelling, they improved, probably as a result of more print exposure. (Contains 2 figures and 3 tables.)