Arabic is a diglossic language, where two language varieties are used: spoken Arabic (SpA) and standard Arabic (StA). The words may be "identical" (maintaining the same phonological expression in the SpA and StA) or "unique" to StA). This study examined the effect of diglossia on reading according to the lexical distance between the SpA and StA forms and whether this influence changes with age. The participants were 137 first-graders that were followed to the second grade. The findings indicated a significant effect of grade level with higher performance in the second grade. A significant association was obtained between the lexical distance and reading accuracy and rate with better performance for identical than unique items across grade levels. No significant interaction between lexical distance and grade level was found. The results indicate the contribution of reading unique and identical forms in the first grade to reading in the second grade. The advantage in reading identical among unique words is discussed in light of the lexical quality hypothesis and dual-route model. The implications of these results were discussed in the context of diglossia, especially the need for StA oral language enrichment at the preschool level.