Approaching the study of literacy through the discourse perspective, this paper first considers some of the relations between discourse and social life. The paper then discusses the epistemological, rhetorical, community-maintaining, and ideological functions of discourse through examination of three types of discipline-based discourses, and outlines challenges to literacy development posed by the unfolding of these functions in the practices of schooling. In conclusion, some promising responses to those challenges are pointed out, grouped into categories corresponding loosely to the epistemological, rhetorical, community-maintaining, and ideological functions of discourse. A figure illustrating a mathematical proof is included. (Contains 90 references.) (RS)