Children from language minority (LM) environments speak a language at home that differs from that at school, are often from socioeconomically disadvantaged backgrounds, and are at risk for reading impairment. We evaluated the main effects and interaction of language status and phonological memory and awareness on reading disorder in 352 children from socioeconomically disadvantaged backgrounds. A significant phonological memory by language status interaction indicated that phonological memory problems were magnified in predicting reading impairment in children from LM versus English dominant (ED) homes. Among children without reading disorder, language minority status was unrelated to phonological processing.