Reading skills in hearing children are closely related to their phonological processing skills, often measured using a nonword repetition task in which a child relies on abstract phonological representations in order to decompose, encode, rehearse in working memory and reproduce novel phonological patterns. In the present study of children who are deaf and have cochlear implants, we found that nonword repetition performance was significantly related to nonword reading, single word reading and sentence comprehension. Communication mode and nonverbal IQ were also found to be correlated with nonword repetition and reading skills. A measure of the children's lexical diversity, derived from an oral language sample, was found to be mediating factor in the relationship between nonword repetition and reading skills. Taken together, the present findings suggest that the construction of robust phonological representations and phonological processing skills may be important contributors to the development of reading in children who are deaf and use cochlear implants.