This article explores the critical role of phonological awareness (PA) in early reading development with a focus on young multilingual children. PA, the ability to detect and manipulate sounds in spoken words is essential for literacy acquisition and is highly responsive to instruction. The article delves into the complexity of PA, its developmental progression, and the challenges of accurate assessment, offering a proposed conceptual model of the supports and demands inherent in PA assessment while emphasizing the significant role of vocabulary knowledge in PA development and the necessity for targeted instruction to prevent reading difficulties. An assessment tool utilizing a database of words with known age-of-acquisition ratings was tested with multilingual Head Start preschoolers, showing better PA performance on tasks with familiar words. The study underscores the need to consider word familiarity in PA assessments to provide accurate instructional needs and prevent misidentification of reading difficulties. Future research should continue to explore the cognitive, linguistic, and design demands of PA assessments to ensure precise identification and support for children’s reading needs.