The study examined phonemic awareness and pseudoword decoding in kindergarten and first grade Arabic native children. Because native speakers of Arabic first learn to read in Modern Standard Arabic (MSA), a language structurally distinct from the local form of the language they grow up speaking, it was hypothesized that the linguistic differences between the two varieties, the so-called diglossic variables, would interfere with the acquisition of basic reading processes in MSA. Two diglossic variables were examined: phoneme and word syllabic structure. The children's phoneme isolation and pseudoword decoding skills were tested. The results showed that both diglossic variables interfered with the children's performance of both tasks in both grades. The findings support the role of linguistic distance in the acquisition of basic reading processes in a diglossic context.