A growing body of evidence indicates that the development of mathematics and literacy skills is highly related. The importance of literacy skills—specifically language—for mathematics development has been well rationalized. However, despite several prominent studies indicating that mathematics skills are highly predictive of literacy development, the reason for this relation is not well understood. The purpose of this study was to identify how and why early mathematics is predictive of early literacy development. Participants included 125 preschool children 3–5 years old (M = 4 years 3 months). Participants were assessed on mathematics, literacy, and cognitive measures in both the fall and spring of their preschool year. Mediation analyses indicated that the relation between early mathematics and literacy skills is mediated by children’s mathematical language skills. These findings suggest that, in prior research identifying mathematical performance as a significant predictor of later literacy skills, mathematical performance may have acted only as a proxy measure for more complex language skills such as those assessed on a mathematical language measure.