We investigated the predictive power of cognitive skills and background variables of 769 first and second grade children learning to read two orthographically different languages Finnish and German in three countries Finland, Germany and Italy. Main results from stepwise regression models showed that in all countries word reading at first grade was best predicted by letter-sound-connection, as found in other transparent orthographies. In Italy and Finland also phoneme blending, a demanding phoneme awareness skill, was a good predictor. Surprisingly, in Germany initial phoneme identification which is a basic phone awareness skill, and mother's occupation predicted first grade reading. At second grade in Finland and Germany the strongest predictors of word reading were rapid naming, in Finland also short-term-memory and in Germany and Italy reading level at the first grade. Results indicate that both orthographical and educational differences in the three countries can account for different predictors in reading.