A study examined children's memory of stories under three varying conditions and focused on how different interaction styles and children's innate abilities affect literacy development. The three conditions tested closely mirrored the three story-reading styles evidenced by teachers of young children were: (1) a control condition where there was no planned interaction between teacher and child beyond the adult reading the story to the child; (2) a questioning condition where the story was interrupted and the child was asked questions regarding the story content by the adult; and (3) a co-construct condition where the child and the adult interacted freely over the text. Subjects were 24 kindergarten students (15 female, 9 male) from a Chicago Public School. Results indicated that the average and above average groups required less prompting than did the low memory ability group. Children with above average memory ability used significantly more words per sentence than did children with average and below average memory abilities. Findings suggest that, overall, significantly more inferences were drawn in response to comprehension questions under the co-construction condition than under the questioning or control conditions. Additionally, significantly fewer incorrect responses were given when the children were under the co-construction condition than when they were under either the questioning or the control conditions. (Contains 10 tables of data and 20 references.) (CR)