This study examined the impact of the lexical distance (spoken, modern standard Arabic-MSA, shared, and pseudo-words) on phonological awareness (PA) and naming speed (RAN). The data from this longitudinal study were obtained from 261 native Arabic-speaking kindergarteners, which were then followed to first grade. The data revealed a significant effect of the lexical distance both on PA and RAN. The PA of the spoken language was easier than the MSA and the other clusters. Similarly, the naming speed of the spoken items was better than the MSA but slower than the shared ones. Regardless of lexical distance, the main effect was on the length of the items but not on the phonemic position. Thus, in the Arabic diglossic reality, certain phonological features of the MSA may not be sufficiently developed and available in the first grade for the reading development. The results are discussed in relation to previous findings.