The authors of this article report on a preliminary study of 18, 4- and 5-year-old children, followed by a longitudinal study of 44 children, who were tested in the first, second, and third grades. The children's ability to detect the ambiguity of lexically ambiguous sentences (e. g., "The children saw the bat lying by the fence") and structurally ambiguous sentences (e. g., "The girl tickled the baby with the teddy bear") was assessed in the preliminary study and in Experiments 1 and 2, which were conducted when the children were in the first and second grades, respectively. Ambiguity detection skill was found to be related to first-grade reading readiness and to second- and third-grade reading achievement. The results suggest that the detection of lexical ambiguity develops in first grade, correlates highly with reading readiness measures, and is a strong predictor of second grade reading ability, indicating that it is a precursor of reading skill. In this study, the ability to detect structural ambiguity emerged in second grade and was a predictor of third-grade reading ability. Clinical implications for the use of ambiguity detection tasks to identify children who are at risk for reading difficulty are discussed.