OBJECTIVE: This study aims to examine the relationship between indicators of prematurity and children’s cognitive and behavioral school readiness in a nationally representative sample and to investigate whether typically occurring preschool enrollment moderates this relationship, particularly for children from disadvantaged families in Australia. METHODS: The Longitudinal Study of Australian Children is a nationally representative prospective sample of two cohorts of children with sequentially obtained indicators of child health and developmental outcomes. We analyzed information on 8060 children aged 4-5 years who had complete data on birth weight, gestational age, prenatal risks, social factors, and cognitive and behavioral outcomes of school readiness. Multivariate regressions were used to relate three indicators of prematurity (low birth weight, preterm birth, and small for gestational age) to cognitive and behavioral school readiness. RESULTS: Children born preterm, small for gestational age, or with low birth weight have significantly lower cognitive school readiness after controlling for social factors and prenatal risks. None of the premature indicators were associated with behavioral school readiness. All children benefited from attending preschool. Yet, preschool enrollment did not moderate the relationship between prematurity and school readiness. The only exception is for small for gestational age survivors with low educated mothers. Preschool enrollment was associated with an increase in cognitive school readiness skills. CONCLUSIONS: Prematurity was associated with lower cognitive school readiness skills. Typical occurring preschool did not eliminate this association. Findings suggest that simply expanding the preschool enrollment is inadequate to address the developmental needs of premature children from disadvantaged backgrounds.