This research project addresses the question how picture books can support the development of literary competence in young children (four to six-year-olds) in classroom situations. The concept of literary competence (Culler 2002 (1975)) [1] is based on the notion of linguistic competence, developed by Chomsky in the mid 1960s.[2] Chomsky in turn based his distinction between (individual) linguistic competence and linguistic performance on de Saussure’s (1857-1913) distinction between the (more collective) notions of langue and parole. To understand (or produce) a sequence of spoken sounds in a certain language as a sentence one must have implicit knowledge of the system, the structure of the language in which the sentence is spoken. Only then will the utterance have meaning or make sense. This implicit knowledge Chomsky calls ‘linguistic competence’. By analogy, Culler suggests we can also think of structure and meaning as constituting properties of literary works, knowledge of which may be present in the reader’s (or listener’s) head to a greater or lesser extent. It is this knowledge that Culler refers to as literary competence. Thus, to read a text as literature requires knowledge of the system or the structure according to which a literary text is organised.