In this chapter we describe a body of research on oral language processing that we believe has important implications for applied linguistics. This research documents the effects of literacy on human oral language processing. Studies in this area show that illiterate adults significantly differ from literate adults in their performance of oral processing tasks that require an awareness of linguistic segments. These studies provide evidence that the acquisition of the ability to decode an alphabetic script changes the way in which the individual processes oral language in certain kinds of cognitive tasks. At the same time, based on research establishing a clear reciprocal relationship between oral language processing skills and literacy, researchers on first language acquisition are extending the scope of their study to explore the way in which an individual's language competence is altered and extended by literacy itself. In this discussion, we describe the broad outlines of this new body of research and scholarship, and explore the implications for our understanding of second-language acquisition, and particularly for theories and research that explore the impact of "noticing" on SLA. We conclude by stressing the social and theoretical importance of including clearly-identified illiterate adults in our growing database on second language acquisition research.