Background: Recent government papers have expressed concern about the poor educational attainment of "looked after" children. Early reading development has been found to be significant in their subsequent academic achievement. The possibility that biosocial factors extraneous to their experiences in public care may underpin their low attainment has not been investigated to date. Methods: The reading ability of 19 primary school children, who had been raised in institutional care from an early age, were compared with 19 children, matched for age and sex, who were comparable in biological background and who had experienced uninterrupted family foster care. Both groups were compared with classroom controls using teacher questionnaires, interviews, systematic observations and cognitive testing. Results: Reading delay was more prevalent in the institutional group and as a group they had lower reading scores than the children reared in family foster care. Variation in IQ accounted for the lower reading scores of the family foster care group compared with their matched classroom controls. Inattention, found in a previous study to be much more evident in the institutional group, partially accounted for the group difference in reading scores, and was situationally specific to formal teacher-directed tasks. Differential effects of caregivers" interest in terms of help with homework were also found. Conclusions: Early reading performance was associated with the experience of being raised "in care" but was not an inevitable outcome. It was concluded that the "type" of substitute caregiving experienced affected reading performance. Institutional upbringing affected reading performance both directly and indirectly through the heightened levels of inattention associated with institutional care.