Background: A fundamental issue for child psychology concerns the origins of individual differences in early reading development. Method: A measure of word recognition, the Test of Word Reading Efficiency (TOWRE), was administered by telephone to a representative population sample of 3,909 same-sex and opposite-sex pairs of 7-year-old twins. Analyses allowing for sex differences in aetiology were used to estimate the extent to which genetic and environmental influences contribute to normal variation in word recognition and word recognition difficulties, defined by scores below the 5th and 10th percentiles of the unselected sample. Results: Both normal variation in word recognition and impaired word recognition abilities were substantially heritable (h[superscript 2] = 0.65-0.67; h[superscript 2][subscript g] = 0.37-0.72). Environmental influences were primarily shared between twins, rather than specific to each individual, and small to moderate in magnitude. There was evidence for qualitative sex differences. Quantitative sex differences were also suggested at the extremes, with genetic influences being more important as a cause of reading difficulties in boys than in girls. Conclusions: These findings indicate that early individual differences and impairments in word recognition are principally influenced by genetic factors and may involve partly distinct genetic or environmental effects in boys and girls. Crucially, they also provide evidence that reading impairments are linked genetically to the normal distribution. Genetic risk for early impairments in word recognition is continuous rather than discrete.