This study examined the effects of an interactive approach called instructional conversations (IC) on the language and concept development of Hispanic students categorized as learning handicapped, by comparing traditional instruction (basal reading approach) with instructional conversations. Lessons were conducted with five limited English proficient students (ages 7-9) in Spanish. The instructional program for the students consisted of traditional basal reading instruction 4 days per week and IC lessons approximately once per week, for a 6-month period. The study focused on five IC lessons and five basal lessons, alternated in implementation. For the IC lessons, the teacher formulated her own questions to generate maximum discussion rather than simply elicit factual recall, allowing students to lead the direction of the discussion when appropriate. Results of proximal measures, assessed for three of the students, indicated there were higher levels of discourse and greater participation with IC than with a basal approach. The distal indices yielded uneven results; there was evidence of greater understanding of the concept following IC but there were no differences in literal comprehension or post-lesson narrative results. Overall results show important trends suggesting that the discourse style of IC may provide linguistically rich learning opportunities for culturally diverse learning handicapped students. The student outcome measure is appended. (Contains 39 references.) (JDD)