The study sought evidence consistent with the hypothesis that phonological recoding of printed words is important during reading acquisition. Children at the end of their Kindergarten year were given a test of nonsense word reading (as a measure of phonological recoding skill) as well as tests of sight word reading and verbal intelligence. Two groups of 28 children were matched on sex, school attended, sight word reading, and verbal intelligence, but differed on phonological recoding skill. If phonological recoding was important in reading acquisition, the children with greater skill in this area should make greater gains in reading achievement over the following years. When reading achievement was tested at the end of Grades 1 and 2, these children were found to be significantly ahead.