The genetic and environmental overlap between static and dynamic measures of preschool phonological awareness (PA) and their relation to preschool letter knowledge (LK) and kindergarten reading were examined using monozygotic and dizygotic twin children (maximum N = 1,988). The static tests were those typically used to assess a child’s current level of PA such as blending and elision, and the dynamic test included instruction in phoneme identity to assess the child’s ability to respond to this instruction. Both forms were influenced by genes and by shared and nonshared environment. The static and dynamic versions were influenced by the same genes, and part of the total genetic influence was shared with LK. They were subject to both overlapping and independent shared environment influences, with the component in common also affecting LK. Nonshared environment influences were mostly independent. Scores from dynamic assessment added only minimally to variance explained in kindergarten reading after LK and static assessment had been factored in. Although one of the genetic factors that influenced both forms of PA also affected kindergarten reading, it was only the one shared with LK. The authors conclude that dynamic assessment of PA in preschool offers little advantage over the more commonly used static forms, especially if LK scores are available, although they acknowledge its potential in cases of preschool educational disadvantage.