The logographic stage assumption in recent models of reading acquisition was examined by studying how German-speaking first graders read and spelled familiar words and matched pseudowords. Reading acquisition by German-speaking children provides an interesting case because the German writing system, in contrast to the English one, is phonologically rather transparent. To further test whether the transition from the logographic to the alphabetic stage poses a major obstacle at the beginning of reading, normally progressing first graders were contrasted with children who experienced serious difficulties at the beginning of reading and writing. In contrast to studies with American and British first graders, it was found that both normally progressing and delayed children relied on alphabetic strategies for both reading and writing, (a) Most children were able to read and - to a lesser extent - to spell completely unfamiliar pseudowords. (b) Reading of pseudowords correlated highly with reading of familiar words, and the same correlation was observed in the case of spelling, (c) Reading errors consisted mainly of nonwords beginning with the first letter(s) of the target, and most spelling errors consisted of spellings that were at least partially phonologically correct, (d) Reading performance was influenced by word exposure time, (e) Both reading performance and spelling performance were strongly predicted by knowledge of grapheme-phoneme correspondences. These findings support the conclusion that a logographic strategy is of limited importance when the writing system is phonologically rather transparent and when the instructional approach does not withhold information about grapheme-phoneme correspondences.