Using context to derive a word's meaning is typically conceptualized as part of the reading comprehension process. However, context sensitivity develops early--before children start to learn to read. This study took a developmental perspective, attempting to capture children's context sensitivity through spoken discourse and assess its value in predicting L2 reading comprehension alongside other reading-related variables. Context sensitivity is conceptualized as a construct consisting of two facets: exploiting directive and disregarding misdirective information in context. Fourth-grade children (N = 113) learning English as a foreign language (L2) heard a three-utterance discourse and selected a picture best representing a discourse-final word which was congruent or not with the previous context. The task was re-administered at Grade 5, together with a reading comprehension test. Results showed that the two facets of context sensitivity were not correlated at either grade. While children showed rapid growth in using directive context from Grade 4 to Grade 5, sensitivity to misdirective information just began to emerge at Grade 5. Despite being separate entities, the two facets of sensitivity, alone and in combination, contributed to predicting L2 reading comprehension concurrently and longitudinally after controlling L2 proficiency (vocabulary and decoding) and linguistic awareness (phonology, morphology, and syntax). Overall, the results support the conceptualization of context sensitivity as a two-faceted construct, to exploit and to disregard context information, with both facets uniquely predicting L2 reading comprehension.