How does age of first bilingual language exposure affect reading development in children learning to read in both of their languages? Is there a reading advantage for monolingual English children who are educated in bilingual schools? We studied children (grades 2–3, ages 7–9) in bilingual Spanish–English schools who were either from Spanish-speaking homes (new to English) or English-speaking homes (new to Spanish), as compared with English-speaking children in monolingual English schools. An early age of first bilingual language exposure had a positive effect on reading, phonological awareness, and language competence in both languages: early bilinguals (age of first exposure 0–3 years) outperformed other bilingual groups (age of first exposure 3–6 years). Remarkably, schooling in two languages afforded children from monolingual English homes an advantage in phoneme awareness skills. Early bilingual exposure is best for dual language reading development, and it may afford such a powerful positive impact on reading and language development that it may possibly ameliorate the negative effect of low SES on literacy. Further, age of first bilingual exposure provides a new tool for evaluating whether a young bilingual has a reading problem versus whether he or she is a typically-developing dual-language learner.