We examined if North (n = 123) and South Korean (n = 123) children in Grades 3 to 8 studying in South Korea differ in their reading, vocabulary, and literacy-related cognitive skills, and whether language and literacy-related skills contribute to reading outcomes differently among North and South Korean children. The results showed that South Korean students performed better in syllable deletion, RAN-Letters, vocabulary, decoding fluency, and reading comprehension after controlling for age and SES. No differences were observed in phonological awareness, RAN-Digits, and visual processing tasks. A multigroup path analysis showed that phonological awareness and vocabulary were more strongly associated with decoding fluency for the South than the North Korean students, whereas the opposite was true for visual processing. The results suggest that South Korean vocabulary knowledge may be a significant factor in addressing the academic difficulties facing North Korean children in South Korean schools and that it is important to consider linguistic characteristics when examining the variations in reading skills and vocabulary knowledge of North Korean students in South Korean schools. These findings have implications for North Korean children's literacy instruction in South Korean schools.