As part of Malaysia's aspirations to achieve developed nation status by 2020, and become a key player in the global economy, the government has sought to improve the English language proficiency of its citizens while maintaining the status and significance of the Malay Language as the national language. Recent strategies have involved incorporating a literature component in the English Language subject in primary and secondary schools, but despite more than a decade of literature instruction, results in national and international tests show that literacy and proficiency in English among Malaysian students are below standards. With students' poor performance in English linked to teachers' apparent lack of proficiency in English and the expectation that all teachers of English in Malaysia are able to teach literature, it is necessary to examine how prospective teachers are being prepared for the task. The study reported in this paper explored the experience of pre-service and conversion teachers of English in dealing with studying literature as part of their teacher education at tertiary level. This experience reflects the interface between theoretical and pedagogical knowledge of literature, conceptualised as literary literacy. The findings provided new insights literature education in the non-native context, with implications for policy and practice in literature education of English teachers in Malaysia.