The purpose of this study was to examine the relation of morphological awareness to reading and spelling skills of children with dyslexia, children who are typical readers, and children who are English language learners (ELLs). Morphological awareness was defined by sensitivity to derivational morphemes, for example, ness, signifying a noun, ize, signifying a verb. The participants were 1,238 students in Grade 6, including 309 ELL students and 929 students who had English as a first language (L1). Morphological awareness was significantly related to reading and spelling over and above the contribution of phonological awareness and oral language skills. Individuals with dyslexia had significantly lower scores than normally achieving readers on the morphological awareness tasks. No differences were reported between the ELL and the English L1 students. All students were less sensitive to derivational morphology when they were required to recognize the appropriate endings on pseudowords, which required a higher level of morphological awareness than real words. Lack of morphological awareness may be a significant contributor to the deficits in reading and spelling characteristic of dyslexic readers and spellers. These results suggest that morphological awareness assessment and training should be administered in children with reading difficulties.