The present paper addresses the issue of cross-linguistic transfer of phonemic awareness and word identification skills across two linguistically distant languages (Russian and Hebrew). The role of early literacy learning was directly assessed by distinguishing two groups of Russian-Hebrew speaking bilinguals; bi-literate (n = 39) and mono-literate bilinguals (n = 41), as well as a group of Hebrew-speaking monolinguals (n = 41). In a longitudinal design, a variety of linguistic, meta-linguistic and cognitive tasks were administered at the commencement of first grade, with Hebrew reading and spelling assessed at the end of the year. We observed general and specific benefits of early acquisition of basic Russian (L1) literacy skills to first grade Hebrew (L2) decoding and spelling. General benefits were evident in the cross-linguistic transfer of phonemic awareness from Russian to Hebrew, while more specific benefits were evident in the enhanced ability of bi-literate bilinguals to spell vowels and consonant clusters in Hebrew. These findings are discussed in the context of two alternative hypotheses: "the central processing hypothesis" and "the script dependent hypothesis".