The topic of this paper is focused on phonological awareness and its importance when it comes to children's language development. Phonological awareness is the ability to divide words into individual sounds and compose the sounds into words, to associate the sounds with letters, as well as to understand a written word. It is described as one of six early literacy skills. The adoption of early literacy is the most important task for preschool children as it largely affects the pre-reading period in which the development of pre-reading skills occurs. This is a prerequisite and essential knowledge that enables easier and quicker adoption of reading skill for a child. Phonological awareness is considered the basis by which children, in addition to reading, adopt and develop language activities of speaking and listening. Given the close relationship between phonological awareness and linguistic activities, this paper explains in more detail the segments of children's language development. Various methodological approaches to promoting phonological awareness can have a positive effect on its development, which is highly important since certain phonological deficiencies can result in difficulties when it comes to reading and writing. Complete linguistic development requires the involvement of all educational process factors, which serves as a basis for this paper to describe the proper implementation of dialogic, stimulating reading to the child. By conducting a structured activity at the “Petrinjčica” Kindergarten, an attempt was made to prove the connection between phonological awareness and language activities, in this case reading, which was confirmed.