A fiercely contested debate in teaching reading concerns the respective roles and merits of reading schemes and real books. Underpinning the controversy are different philosophies and beliefs about how children learn to read. However, to some extent debates have largely been rhetoric-driven, rather than research-driven. This article provides a theoretical perspective derived from instructional psychology and explores the assumptions that have been made about the use of real books and reading schemes, which have tended to polarise arguments about their respective strengths and limitations. It analyses the structures of adult literature, children's real books, and reading schemes, and examines the demands that they make on children's sight vocabulary and phonic skills. The critical high-frequency words and grapheme-phoneme correspondences (GPCs) are identified that will enable children to read the majority of phonically regular and irregular words that they encounter which, perhaps surprisingly, occur more often in real books than structured reading schemes. Learning additional sight words or GPCs is of limited value due to their relatively low occurrence in written English and, thus, potentially minimal impact on children's reading. Finally, the implications of this research for teaching reading are considered, particularly the complementary roles of real books and teaching methods derived from instructional psychology. In the past they have been viewed as diametrically opposed and mutually exclusive. (Contains 4 figures, 12 tables and 2 notes.)