PURPOSE: to characterize school performance and phonological processing of First and Second Grade students according to the following variables: gender; writing, arithmetic, and reading performance; lexical phonological access; phonological short-term memory; and phonological awareness, investigating the presence of correlations between groups and among variables. METHOD: eighty-eight students (boys and girls) with ages between 05 years and 08 years, without speech or learning complaints, took part in the study. Participants had their performance assessed on: writing, reading and arithmetic tasks; subtests of the School Performance Test (Stein, 1994); lexical access; short term phonological memory; and skills related to phonological processing. Data were tabulated and analyzed through Mann-Whitney U test for comparison of school performance variables and phonological processing. Spearman coefficient was used to check the correlation among such variables. The confidence interval adopted was 95%. RESULTS: most students showed lower performance on School Performance Test' subtests, with higher mean accuracy as for reading. No significant difference was observed between boys and girls. In the First Grade group, good to moderate positive correlations between lexical access and phonological awareness; reading and writing and phonological awareness; arithmetic and phonological awareness were observed. In the Second Grade group, good to moderate positive correlations among writing, reading and arithmetic; phonological awareness, lexical access, phonological memory and phonological awareness were observed. CONCLUSIONS: second grade students showed better performance on writing, reading and phonological awareness. In contrast to performance on writing, reading and arithmetic, performance on lexical access and phonological memory did not differ between grades. Good to moderate positive correlations between school performance and phonological processing were observed.