It is well established that speech, language and phonological skills are closely associated with literacy, and that children with a family risk of dyslexia (FRD) tend to show deficits in each of these areas in the preschool years. This paper examines what the relationships are between FRD and these skills, and whether deficits in speech, language and phonological processing fully account for the increased risk of dyslexia in children with FRD. One hundred and fifty-three 4-6-year-old children, 44 of whom had FRD, completed a battery of speech, language, phonology and literacy tasks. Word reading and spelling were retested 6 months later, and text reading accuracy and reading comprehension were tested 3 years later. The children with FRD were at increased risk of developing difficulties in reading accuracy, but not reading comprehension. Four groups were compared: good and poor readers with and without FRD. In most cases good readers outperformed poor readers regardless of family history, but there was an effect of family history on naming and nonword repetition regardless of literacy outcome, suggesting a role for speech production skills as an endophenotype of dyslexia. Phonological processing predicted spelling, while language predicted text reading accuracy and comprehension. FRD was a significant additional predictor of reading and spelling after controlling for speech production, language and phonological processing, suggesting that children with FRD show additional difficulties in literacy that cannot be fully explained in terms of their language and phonological skills.