The aim of this study is to examine the relationship between Mandarin Chinese-speaking children’s narrative skill in telling personally experienced stories in preschool and their later language and reading ability. Fourteen Mandarin-speaking children, 8 boys and 6 girls, were visited at home when they were 3;6, 7;5, and 10;1. The children were asked to tell personal narratives to the experimenter at 3;6 and 7;5 and to complete word definition, receptive vocabulary, and Chinese reading comprehension tests at 7;5 and 10;1. Two of the children’s stories with the greatest number of narrative clauses were selected and measured using adaptations of the narrative assessment profile developed by McCabe and Bliss (2003). A number of significant positive correlations were observed between the children’s narrative skills and their receptive vocabulary, definition, and reading comprehension abilities. These findings suggest that the children who had good narrative skill in preschool also performed better in reading comprehension and language tasks in primary school. This study shows that the continuous and interrelated relationship between early oral narrative and later language and literacy is evident not only in English-speaking children but also in Mandarin-speaking children. The educational implications for this study are highlighted.