There is evidence that the capacity to segment an utterance into words ameliorates with literacy, yet prior inquiry makes it difficult to unravel the effect of literacy from that of age or cognitive skills. This study tested the supposition that literacy raises lexical segmentation in a second language in a unique sample of adult illiterates learning to read in their second language, controlling for cognitive skills and employing a task that taps language processing rather than solely metalinguistic awareness. Participants’ segmentation was correlated with first language reading at the start of an intensive literacy course for illiterate adults. At the end of the course, those learning to read for the first time benefited more in terms of their segmentation capacities. The study debates implications for models of second language learning.