The role of social interaction in the literacy learning of 21 children 3 and 4 years of age was investigated over a period of 8 months. Data were collected at a preschool classroom writing center, using the ethnographic techniques of participant observation, field notes, collection of written texts, as well as audio and video tapes. Patterns in the data indicated that author/audience conversation occurring as children completed self-selected literacy activities encouraged them to (1) activate, confirm/disconfirm, and revise their existing hypotheses about literacy; (2) form new literacy knowledge; (3) become audiences for their own texts; (4) internalize the audience's perspective and use this information to plan texts for absent audiences; (5) experience literacy activities beyond their independent abilities; and (6) with their teachers, build shared understandings about literacy. Overall, the findings indicated that children's self-selected literacy activities are rich contexts for literacy learning, and that social interaction, as part of these events, provides the predictable context and motivation for literacy learning, as well as influencing the kinds of literacy strategies children internalize and use independently. Appendices provide lists of transcription conventions and speech styles used in literacy events. (Author/RH)