This paper explains two observation guides that teachers can use to describe emergent reading behaviors among young children during the children's interactions with familiar storybooks. The guides are derived from a review of research and focus on independent and assisted interactions. When observing children's independent interactions with storybooks, teachers can examine the following factors related to children's oral reconstruction of a story: (1) the nature of text created; (2) completeness of the story; (3) the source of the story; (4) accuracy of text creation; (5) book-handling behaviors; and (5) oral delivery. During assisted storybook interactions, when adult assistance is needed on a continuous basis, children's responses can be assessed in three categories: the nature of text segments created, the source of the child's response, and book handling. By using these guides to carefully watch young children interact with storybooks, teachers can become aware of children's emergent literacy knowledge. A list of 53 references, copies of teacher's assessment forms, and examples of children's story retelling are provided. (MM)