For more than a century, neurologists have hypothesized that the arcuate fasciculus carries signals that are essential for language function; however, the relevance of the pathway for particular behaviors is highly controversial. The primary objective of this study was to use diffusion tensor imaging to examine the relationship between individual variation in the microstructural properties of arcuate fibers and behavioral measures of language and reading skills. A second objective was to use novel fiber-tracking methods to reassess estimates of arcuate lateralization. In a sample of 55 children, we found that measurements of diffusivity in the left arcuate correlate with phonological awareness skills and arcuate volume lateralization correlates with phonological memory and reading skills. Contrary to previous investigations that report the absence of the right arcuate in some subjects, we demonstrate that new techniques can identify the pathway in every individual. Our results provide empirical support for the role of the arcuate fasciculus in the development of reading skills.