A 12-month longitudinal study was conducted in Brisbane, Australia, to investigate the interaction that takes place when a parent and young child read together. Parent-child book-reading episodes that took place in the home at the end of the preschool year of 25 randomly selected children and at the end of Year 1 at a State Primary School were analyzed and compared. In addition, the study incorporated assessments of the children's language and reading attainments and self-concept, interviews with parents and teachers, and observations of teachers' group story-reading behavior. Study findings included the following: (1) parents focused on story meaning, rather than on word meaning; (2) several parents discussed the text's illustrations; (3) children often modelled questions on those of the parent reading to them; (4) parents asked many inferential questions to which their children did not respond; (5) although parents had more utterances overall than the children, in highly interactive dyads, power was shared by parent and child, with the child contributing questions and comments; (6) the number of parent utterances and child comments decreased from preschool to Year 1; and (7) the amount and type of interaction between parent and child affected children's reading ability and self-concept. The findings have implications for parent programs as well as for the context in which literacy is taught in the schools and the target of community literacy programs. (AC)