A few studies have indicated that dynamic measures of phonological awareness may contribute uniquely to the prediction of early reading development. However, standard control measures have been few and limited by floor effects, thus limiting their predictive value. The purpose of the present study was to examine the predictive value of a dynamic test of phonological awareness while controlling for both letter knowledge and standard phonological awareness using measures with no floor effect. We administered a dynamic test of phonological awareness along with traditional tests of phonological awareness and letter knowledge to 160 children in the fall of kindergarten. Reading outcomes were studied at three test points: at the end of kindergarten, in the first half of Grade 1, and at the end of Grade 1. The results indicated that the dynamic test of phonological awareness contributed significantly to the prediction of children’s reading development in kindergarten and the first half of Grade 1 after control for static phonological awareness and letter knowledge. However, the unique prediction value of the dynamic test of phonological awareness did not extend to the end of Grade 1.