Purpose: Children with cochlear implants (CIs) have difficulty with literacy, and although it is established that phonological processing underlies literacy skills in children with typical hearing (TH), the relation of phonological processing and literacy in children with CIs is not fully understood. This study evaluated the contributions of phonological processing to word-level reading and spelling skills of children with CIs. Method: Thirty children with CIs and 31 children with TH in Grades 3 through 6 completed measures of word reading, spelling, and phonological processing. The contributions of phonological processing (phonological awareness, phonological memory, and phonological recoding) to reading and spelling were evaluated. Results: Children with CIs scored lower across measures of reading, spelling, phonological awareness, and phonological memory, but not phonological recoding, than children with TH. Phonological processing components were significant predictors of reading and spelling for children with CIs but not for children with TH. Conclusions: This study underscores the important contribution of phonological processing, particularly phonological awareness and phonological memory, in literacy development for children who use CIs. These results suggest an urgent need for research into not only the underlying mechanisms that predict literacy outcomes but also evidence-based interventions to support these students' literacy.