In 2001, the American Association of Colleges for Teacher Education Board of Directors created a focus council examine what all preservice teacher candidates need to know about reading. The council soon broadened the scope of its work from reading to literacy, focusing specifically on grades K-4. This paper is the council's report to the Board. The council organized its work around three issues: how K-4 children become literate and what teachers need to know; how teachers should teach K-4 literacy based on what is known about how they learn to read and write; and what teacher education programs should do to prepare effective literacy teachers. Part one addresses the research available to define how children become literate. Part two explores how this research can be used to create the scientifically based instruction called for in the current political climate. Part three identifies how this knowledge can be applied to the design of teacher preparation programs for early childhood and elementary literacy teachers. The appendixes supplement the paper with excerpts from relevant national standards and with descriptive examples of effective undergraduate teacher preparation programs for early literacy instruction. (Contains 152 references.) (SM)