THE STANFORD READING PROJECT IS DISCUSSED IN TERMS OF ITS OPERATION, ITS FUNCTION IN THE ELEMENTARY SCHOOL SETTING, THE RATIONALE AND MAJOR COMPONENTS OF THE CURRICULUM, AND COMPUTER-ASSISTED INSTRUCTION (CAI). THE PROGRESS OF THE STANFORD CAI READING PROGRAM IS REPORTED WITH PARTICULAR REFERENCE TO THE SCHOOL YEAR 1966-67 WHEN THE INITIAL CLASSES OF FIRST-GRADE STUDENTS RECEIVED A MAJOR PORTION OF THEIR DAILY READING INSTRUCTION ON A CAI TUTORIAL SYSTEM. LABORATORY ORGANIZATION, OPERATION, AND CLASSROOM COOPERATION ARE DESCRIBED. THE CURRICULUM IS DIVIDED INTO FOUR MAJOR AREAS--DECODING SKILLS, COMPREHENSION, GAMES AND OTHER MOTIVATIONAL DEVICES, AND REVIEW. A REPORT ON STUDENT PROGRESS AT A FAIRLY GROSS LEVEL IS GENERATED EACH WEEK. REVISIONS FOR THE COMING YEAR INVOLVE MODIFYING THE BRANCHING STRUCTURE, DISPLAY FORMATS, AND THE AUDIO SEARCH PROCEDURES. REFERENCES AND FIGURES ARE INCLUDED. (BK)