The majority of studies examining the language and literacy skills of second generation immigrant bilingual children have focused on the breadth of lexical knowledge in populations with a low level of involvement in literacy activities. This study extends previous work in three ways. First, we focused on a sample of second generation immigrant bilingual children from favorable socio-cultural backgrounds. Second, we examined whether these children show lexical knowledge gaps in their second language on various measures of breadth and depth, as compared to their monolingual peers. Finally, we asked whether this gap tends to increase, remain stable, or decrease with formal schooling. Bilingual (n = 70) and monolingual (n = 55) children between the ages of 7 and 8 years were evaluated on measures of depth and breadth of lexical knowledge in the second language of the bilingual group. Both groups were tested twice: at the beginning of second grade and at the beginning of third grade. The findings indicate a significant gap between the target groups with respect to most measures of both depth and breadth at the beginning of second grade. However, after a year of schooling, the bilingual children showed significant progress in their lexical knowledge in their second language. The discussion addresses theoretical and clinical implications of these findings.