This study investigates the relationship between the language of instruction and learning of literacy skills among pre-primary school children in a multilingual environment. The sample consists of 1867 learners from low-income urban households, attending 147 low-cost private pre-primary schools located in low-income areas of Nairobi, Kenya. About one-half (48.4%) of the learners were taught basic aspects of literacy such as letter naming, letters sounds and rhymes using Kiswahili (a local lingua franca) while the other half (51.6%) were taught these aspects using English. The learners involved in this study come from different ethnic backgrounds and hence Kiswahili and English are not their first languages. This study poses the question: In a multilingual environment, is there an advantage in learning literacy skills using a second language (in this case Kiswahili) over a third language (English)? Relationship between literacy scores and language of instruction is examined using descriptive techniques. This relationship is further examined using multivariate techniques controlling for learner sex, classroom resources, class size, teacher pre-service training, and teacher years of experience, among other variables. Results show that learners taught literacy skills using Kiswahili significantly outperformed their counterparts taught using English (at p < 0.05 level) even after adjusting for the effects of other factors in the analyses. The implications of the finding to education policy and practices are discussed.