We examined the relation between home literacy environment (HLE), parents' reading skills, and children's emergent literacy skills (pinyin letter knowledge, phonological awareness, and vocabulary) and reading (word reading and reading comprehension) in a sample of 168 Chinese children (M[subscript age] = 74.26 months) followed from kindergarten to Grade 1. Results of structural equation modeling showed that code-related HLE activities and access to literacy resources continued to predict children's emergent literacy skills after controlling for the effects of family's socioeconomic status and both parents' reading skills. Parents' reading skills also exerted a direct effect on children's reading comprehension. These findings suggest that HLE exerts a true environmental effect on children's reading skills that is not due to a genetic confound.