The current study investigates how beginner readers learn to read Setswana and English, and whether there is cross-language transference of skills between these two languages. Letter knowledge, phoneme awareness and reading of words and pseudowords in both Setswana and English were assessed in 36 Grade 2 children. A complex pattern emerged. Results revealed that letter knowledge in Setswana (which the pupils learnt a year before they learnt to read English) did not predict any cross-language reading of English or Setswana words. Letter knowledge in English, however, was a good predictor both across and within language of word and pseudoword reading. Phoneme awareness in Setswana predicted reading of English pseudowords and also reading of Setswana words and pseudowords. Phoneme awareness in English did not show any cross-language transfer effects, though it did predict reading of pseudowords but not real words in English. Implications for the teaching of reading are also discussed.