Background: The present study concerns literacy and its underlying cognitive skills in Dutch children who differ in familial risk (FR) for dyslexia. Previous studies with FR-children were inconclusive regarding the performance of FR-children without dyslexia as compared to the controls. Moreover, van Bergen et al. (2011) recently showed that FR-children with and without dyslexia differed in parental reading skills, suggesting that those who go on to develop dyslexia have a higher liability. The current study concerned 1) the comparison of three groups of children at the end of second grade and 2) the intergenerational transfer of reading and its underlying cognitive skills from parent to child. Method: Three groups of children were studied at the end of second grade: FR-dyslexia (n = 42), FR-no-dyslexia (n = 99), and control children (n = 66). Parents and children were measured on naming, phonology, spelling, and word and pseudoword reading. Results: The FR-dyslexia children were severely impaired across all tasks. The FR-no-dyslexia children performed better than the FR-dyslexia children, but still below the level of the controls on all tasks; the only exception was rapid naming (RAN), on which they were as fast as the controls. Focusing on the FR subsample, parental reading and RAN were related to their offspring's reading status. Conclusions: We replicated and extended van Bergen et al.'s study in showing that the FR-children who develop dyslexia are likely to have a higher liability. Both the group comparisons and the parent-child relations highlight the importance of good RAN skills for reading acquisition.