Early success in reading is predicated on a child's ability to accurately and effectively master core literacy constructs (e.g., phonological awareness, alphabet knowledge, concept of word, and grapheme-phoneme correspondence) and to exercise these understandings in a comfortable sociocultural context. In recent years, educators, legislators, and policy-makers have shown great interest in creating an effective and instructionally useful diagnostic screening tool for identifying children at risk for early reading difficulties. In response to this charge, the Phonological Awareness and Literacy Screening-Kindergarten (PALS-K) was developed. Through Fall 2003, more than 430,000 kindergarten students in Virginia had been screened using PALS-K. The purposes of this paper are to (a) describe the PALS-K instrument, (b) examine its effectiveness in screening for poor beginning literacy skills, and (c) discuss the educational and policy implications of the results of statewide literacy screening efforts.