The development of reading skills is underpinned by oral language abilities: Phonological skills appear to have a causal influence on the development of early word-level literacy skills, and reading-comprehension ability depends, in addition to word-level literacy skills, on broader (semantic and syntactic) language skills. Here, we report a longitudinal study of children at familial risk of dyslexia, children with preschool language difficulties, and typically developing control children. Preschool measures of oral language predicted phoneme awareness and grapheme-phoneme knowledge just before school entry, which in turn predicted word-level literacy skills shortly after school entry. Reading comprehension at 8½ years was predicted by word-level literacy skills at 5½ years and by language skills at 3½ years. These patterns of predictive relationships were similar in both typically developing children and those at risk of literacy difficulties. Our findings underline the importance of oral language skills for the development of both word-level literacy and reading comprehension.