The universal role of phonological processing skills for reading acquisition has been established in many different languages including Arabic. However, in Arabic little knowledge exists about the development of wide-range of phonological tasks and about the correlations between them. We longitudinally studied the developmental trends and correlations between different phonological tasks in kindergarten and first grade and tested their relation to reading accuracy and fluency. Thirty-two children individually completed the same ten phonological processing tasks in kindergarten and first grade. In first grade, reading measures and letter naming were also assessed. Developmental effects of phonological skills showed significant improvement of performance between the two phases in the majority of tasks. Task comparability has raised interesting issues related to the developmental hierarchy of phonological awareness tasks. Moreover, phonological awareness tasks were more inter-correlated in first grade compared to kindergarten, and their correlations to reading were also more established when phonological measures were collected in first grade. The developmental hierarchy of phonological tasks seems to depend on the linguistic and cognitive complexity (unit position, maintenance of the coherent unit and word length) of the items, beyond the size of the phonological unit which was manipulated. The observations reported here have practical implications for planning graded phonological instruction and intervention strategies.