Reading readiness varies as a function of family and environmental variables. This study of 11-year-old children (N=39) was designed to determine if there was an additional or interactive contribution of brain structure. Evidence is presented that both environmental and biological variables predict phonological development. Temporal lobe (planar) asymmetry, hand preference, family history of reading disability, and SES explained over half of the variance in phonological and verbal performance. The results demonstrate a linear association between cerebral organization and phonological skill within socioeconomic groups. These data provide concrete evidence to support the commonly held assumption that both environmental and biological factors are independent determinants of a child's ability to process linguistic information.