Data from two twin studies are examined to assess genetic and environmental influences on literacy, and the etiological relationship between language and literacy. Study 1 used children from 86 families previously recruited for a study of the genetics of specific language impairment (see Bishop, North, & Donlan, 1995), who completed tests of single-word reading and spelling. Literacy problems in this sample were common, were strongly heritable, and showed a close genetic relationship with poor nonword repetition. Study 2 included two subsets of children: 37 twin pairs who had taken part in study 1, 3 to 4 years earlier, and 100 twin pairs recruited from the general population by Bishop et al. (1999). All children were given a standardised test of nonword reading. There was no genetic influence on nonword reading ability, either across the normal range, or at the lower extreme, though there were significant associations with some social variables. However, bivariate DeFries–Fulker analysis suggested that in this study, as in study 1, there was shared genetic variance between poor nonword repetition and literacy deficits. It is concluded that poor nonword repetition, which is known to be highly heritable, puts the child at risk for literacy problems. However, in a general population sample, such as that included in study 2, poor nonword repetition is a relatively rare correlate of literacy problems, which are more likely to have an environmental origin. Thus the different pattern of results in the two studies can be explained if one assumes that genetic influences are substantial only when literacy problems are severe and/or accompanied by oral language difficulties.