Skilled adult readers identify the first letter in a string of random consonants better than letters at any other position, and this advantage for the initial position is not seen with strings of symbols or familiar shapes. Here we examined the developmental trajectory of this first-letter advantage by testing children in Grades 1 to 5 of primary education in a target-in-string identification paradigm. Strings of five letters or five simple shapes were briefly presented, and children were asked to identify a target letter/shape at one of the five possible positions. Children responded by choosing between the target and an alternative that was a neighboring letter/shape (e.g., TPFMR—M vs. F at position 4). The serial position function linking accuracy to position-in-string was found to be affected by reading ability differently for letter stimuli compared with shape stimuli, and this was found to be almost entirely driven by differences in performance in identifying targets at the first position in strings. Here, accuracy increased more rapidly for letter stimuli than for shape stimuli as reading ability increased. This developmental pattern, plus the fact that letter strings were composed of random consonants and the task minimized the involvement of verbal recoding, allows us to exclude an explanation of the first-letter advantage in terms of serial reading strategies or phonological decoding. The findings suggest that the first-letter advantage is a function of, and a marker for, increasingly efficient orthographic processing.