The knowledge that reading and phonological awareness are mainly reciprocally related has hardly influenced the status of a phonological awareness deficit as the main cause of a reading deficit in dyslexia. Because direct proofs for this theory are still lacking we investigated children at familial risk for dyslexia in kindergarten and first grade. The familial risk was genuine; 40% developed reading deficits in first grade. However, we did not find any relationship between a phonological awareness or other phonological processing deficits in kindergarten and reading deficits in first grade. Finally, we did not find evidence for the claim that a phonological awareness deficit assumedly causes a reading deficit via "unstable" or otherwise corrupted letter-speech sound associations. Although earlier research indicated letter knowledge as another significant determinant of later reading deficits, we found no support for this claim. Letter knowledge learning and learning to associate and integrate letters and speech sound are different processes and only problems in the latter process seem directly linked to the development of a reading deficit. The nature of this deficit and the impact it might have on multisensory processing in the whole reading network presents a major challenge to future reading and dyslexia research. (Contains 2 tables and 2 figures.)