The aim of this study was to examine, with a longitudinal study design, the effects of phonological memory and native language (NL) literacy acquisition on learning English as a foreign language (FL). The subjects were 160 Finnish school children, who were 7-year-old first graders at the beginning of the study. Measures in the first grade were NL word recognition and listening comprehension; in the second grade, word recognition, reading comprehension, and phonological memory; and in the third grade, FL skills. The main result from the structural equation modeling was that both NL literacy and phonological memory have positive effects on FL learning. These skills explained 58% of the variance in English proficiency. Therefore, proficiency in NL literacy skills is highly significant for FL learning, although the orthographic regularity varied a lot (Finnish vs. English). On the basis of the results, it can be concluded that one way to promote FL learning is by diagnosing NL literacy skills early on and by providing training in NL literacy for at-risk children. In addition, the significant role of phonological memory in FL learning suggests that training in the FL phonology may enhance competence in the foreign language.