Twenty children with mental retardation (MR), age 7-12, completed a phonological reading skills program over approximately 10 weeks. As a result of the instruction, they were better able to sound out learned and transfer words compared to a control group matched on age, IQ, nonword reading, language comprehension, and phonemic awareness. Final sounding out was predicted by beginning reading skill in both groups, by phonemic awareness and articulation speed in the control group only, and by general language ability in the instruction group only. Neither IQ nor verbal working memory correlated significantly with final sounding out ability in either group. It is suggested that the instruction succeeded in compensating for weaknesses in phonemic awareness and speech articulation, but favored those who had better language skills.