The study focuses on the beliefs of Arabic-speaking mothers in Israel relating to early literacy, and the relations between their beliefs and their children's actual early literacy skills. Participants included 113 mothers and their 5-6-year-old preschool children. At the families' homes, mothers reported about the richness of the home literacy environment (HLE), their general beliefs relating to the importance of the literacy environment and their specific estimations of their child's letter knowledge, phonological awareness, word writing and reading. In preschools, we assessed children's letter knowledge, phonological awareness, word writing and reading. Results showed that mothers were aware of their children's early literacy skills yet they over-estimated them. In a series of hierarchical regression analyses, we found that family socio-economic status (SES) significantly explained all of the children's early literacy skills. Beyond SES, richness of the HLE contributed to most of the assessed literacy skills. Mothers' general beliefs regarding the importance of the HLE and their estimation of their child's literacy skills explained children's skills beyond SES and HLE. The study has educational implications relating to the promotion of children's early literacy skills in Arabic within the family.