Our objective was to study the prereading skills of very-low-birth-weight (VLBW; ≤ 1500 g) prematurely born children at the age of five years. A regional cohort of 89 VLBW children and 152 full-term (FT) born children was assessed for letter knowledge, phonological processing, and speeded naming. Full-scale IQ (FSIQ) was assessed using a short version of WPPSI-R. The associations of parental and neonatal factors, and FSIQ with prereading skills were assessed. VLBW group had poorer prereading skills, and there were more VLBW children at-risk (performing < -1 SD) compared to FT children in phonological processing (23% vs. 9%, p = .002), letter knowledge (27% vs. 14%, p = .017), and the accuracy of speeded naming (26% vs. 13%, p = .020). VLBW children had lower average FSIQ and Performance IQ (both comparisons p < .001) than FT controls, but Verbal IQ did not differ. When FSIQ was used as a covariate, VLBW children did not differ from the FT group in prereading skills indicating that they are at risk for more global developmental problems. Lower parental level of education as well as parent's reading problems were negatively associated with VLBW children's prereading skills. Positively, about 75% of VLBW children performed within the normal range in each individual prereading skill.