Arabic native speaking children are born into a unique linguistic context called diglossia (Ferguson, "word", 14, 47?56, [1959]). In this context, children grow up speaking a Spoken Arabic Vernacular (SAV), which is an exclusively spoken language, but later learn to read another linguistically related form, Modern Standard Arabic (MSA). Forty-two first-grade Arabic native speaking children were given five measures of basic reading processes: two cognitive (rapid automatized naming and short-term working memory), two phonological (phoneme discrimination and phoneme isolation), and one orthographic (letter recoding speed). In addition, the study produced independent measures of phonological processing for MSA phonemes (phonemes that are not within the spoken vernacular of children) and SAV phonemes (phonemes that are familiar to children from their oral vernacular). The relevance of these skills to MSA pseudoword reading fluency (words correct per minute) in vowelized Arabic was tested. The results showed that all predictor measures, except phoneme discrimination, correlated with pseudoword reading fluency. Although phonological processing (phoneme isolation and discrimination) for MSA phonemes was more challenging than that for SAV phonemes, phonological skills were not found to affect reading fluency directly. Stepwise regression analysis showed that the strongest predictor of reading fluency in vowelized Arabic was letter recoding speed. Letter recoding speed was predicted by memory, rapid naming, and phoneme isolation. The results are discussed in light of Arabic diglossia and the shallow orthography of vowelized Arabic.