The study examines how the home environment relates to the reading and writing ability of Kiswahili speaking children from a rural area in eastern Tanzania. Three hundred grade three children were assessed on letter, word, and sentence reading, and word writing abilities. Mothers/female guardians responded to a questionnaire-based interview about the home environment. The results show that performance in reading and writing measures was at a level slightly above 50% of the maximum score. Dispersion between the scores was large. There was no significant gender difference in performance, although the boys performed slightly higher than the girls. Correlation analysis showed moderate to high relationship between reading and writing measures and home environment variables. Multiple regression analysis procedure identified four predictors of a summary score of reading and writing ability. These are fathers’ education, the quality of house wall material, number of books for school subjects found in the home, and parental involvement in the child’s school learning. The home environment variables accounted for a rather large variance (31%) in reading and writing ability. Fathers’ education accounted for 16% of the variance and the other variables added 15% of the variance. A specific analysis revealed significant effect of father’s education, construction material for the house walls and books, but not of parental involvement, on separate reading measures (letter, word and sentence reading). Conversely, in terms of children’s ability to write, parental involvement was the only significant predictor. Possible explanations are discussed. The identified variables confirmed the significant role the home environment plays in children’s ability to read and write. The variables are important to consider for research as well as for government and policy decisions when planning to improve the home environment as well as children’s school learning and the development of literacy skills at least in contexts which have similarities with this study.