Humans’ propensity to acquire literacy relates to several factors, among which, the ability to understand speech in noise (SiN). Still, the nature of the relation between reading and SiN perception abilities remains poorly understood. Here, we dissect the interplay between (i) reading abilities, (ii) classical behavioral predictors of reading (phonological awareness, phonological memory and lexical access), and (iii) electrophysiological markers of SiN perception in 99 elementary school children (26 with dyslexia). We demonstrate that cortical representation of phrasal content of SiN relates to the development of the lexical (but not sublexical) reading strategy. In contrast, classical behavioral predictors of reading abilities and the ability to benefit from visual speech to represent the syllabic content of SiN account for global reading performance (i.e., speed and accuracy of lexical and sublexical reading). Finally, we found that individuals with dyslexia properly integrate visual speech information to optimize processing of syntactic information, but not to sustain acoustic/phonemic processing. These results clarify the nature of the relation between SiN perception and reading abilities in typical and dyslexic child readers, and identified novel electrophysiological markers of emergent literacy.