The utility of Chinese tone processing skill in detecting children with English reading difficulties was examined through differences in a Chinese tone experimental task between a group of native English-speaking children with reading disabilities (RD) and a comparison group of children with normal reading development (NRD). General auditory processing, English phonemic processing and English reading skills were also tested. We found differences between groups in Chinese tone processing skill, as well as general auditory processing and English phonemic skills. The RD group was significantly poorer than NRD on tasks of Chinese tone, phonemic and frequency modulated (FM) tone processing. Another finding was a different pattern of relationship between RD and NRD groups in Chinese tone, phonemic and FM tone processing as predictors of reading skills. For children with RD, FM tone processing was a significant predictor of pseudoword reading; for NRD, phonemic and Chinese tone processing skills predicted real word reading. These findings contribute to improved understanding of the roles of general auditory processing and phonological processing skills in RD, with implications for assessment and intervention with children who have English reading difficulties.