This study investigated the influence of first language (L1) phonology on second language (L2) early reading skills in Sylheti-English bilinguals (N = 58; 48% girls; British Bangladeshi) and their monolingual-English peers (N = 43; 45% girls; 96% White British, 4% multiethnic British) in a diaspora context. Language-specific phonological awareness and nonword repetition were tested at two time points (6;2-7;8 years-old). At Time 1, the bilinguals had lower productive accuracy for phonological sequences that violated their L1 phonology (d = 0.56; 0.84), and these skills accounted for a significant amount of variance in their reading accuracy. At Time 2, the language-specific effects were no longer present. These findings highlight the importance of considering language structure in multilingual early literacy development.