Understanding the competencies that underpin children's transition into early literacy is the main aim of this paper which explores four elements: (i) children's language development; (ii) their alphabetical knowledge as an indicator of initial reading; (iii) their in-class behaviour; and (iv) their socio-economic status (SES). Two studies are reported. The first is based on a cohort of end of preschool Queensland children from low SES communities (n=157) and their expressive and receptive language development and their level of in-class behaviour using the Rowe and Rowe Behavioural Rating Inventory (1997). The second study is a significant extension of the first, involving a cross section of SES school children starting Year 1 (n=457) and a more detailed measure of in-class behaviour using the SWAN Rating Scale for Attention (Swanson et al., 2005). The pattern of results demonstrated an inter-relationship between children's language levels, in-class behaviour, and initial reading development and the impact SES has on these factors. The implications for literacy practice and theory are discussed.