What causes the literacy gap and can schools compensate for it? The authors investigated 3 drivers of the gap: preliteracy knowledge, schooling, and the summer vacation. Longitudinal literacy data over 5 time points were collected on 126 five-year-olds attending higher or lower socioeconomic status (SES) schools during their first 15 months of school. There were several noteworthy findings: (a) gaps in preliteracy knowledge at school entry favor higher SES schools, (b) preliteracy knowledge predicted later progress over and above SES and gender, (c) during the school year there was a widening of the gap between higher SES schools and lower SES schools in reading and spelling skills, and (d) children attending lower SES schools exhibited losses during summer whereas children attending higher SES schools nearly always gained. Contrary to previous studies, the present results indicated that when there are concentrations of children from higher and lower SES in schools located in the children's respective SES areas, the achievement gap widens.