Background. Learning to read is very challenging for Hong Kong children who learn English as a second language (ESL), as they must acquire two very different writing systems, beginning at the age of three. Few studies have examined the role of phonological awareness at the subsyllabic levels, oral language proficiency, and L1 tone awareness in L2 English reading among Hong Kong ESL kindergarteners. Aims. This study aims to investigate L1 and L2 phonological awareness and oral language proficiency as predictors of English reading among children with Chinese as L1. Sample. One hundred and sixty-one typically developing children with a mean age of 5.16 (SD=.35) selected from seven preschools in Hong Kong. Method. Participants were assessed for English reading, English and Chinese phonological awareness at different levels, English oral language skills, and letter naming ability. Results. Hierarchical regression analyses indicated that both oral language proficiency and phonological awareness measures significantly predicted L2 word reading, when statistically controlled for age and general intelligence. Among various phonological awareness units, L2 phonemic awareness was the best predictor of L2 word reading. Cross-language transfer was shown with L1 phonological awareness at the tone level, uniquely predicting L2 word reading. Conclusions. The present findings show the important role of phonological awareness at the subsyllabic levels (rime and phoneme) and oral language proficiency in the course of L2 reading development in Chinese ESL learners. The significant contribution of L1 tone awareness to L2 reading suggests that phonological sensitivity is a general competence that ESL children need to acquire in early years. The findings have significant implications for understanding L2 reading development and curriculum development. Copyright © 2012 The British Psychological Society.