Language delay is a frequent antecedent of literacy problems, and both may be linked to phonological impairment. Studies on developmental dyslexia have led to contradictory results due to the heterogeneity of the pathological samples. The present study investigated whether Italian children with dyslexia showed selective phonological processing deficits or more widespread linguistic impairment and whether these deficits were associated with previous language delay. We chose 46 children with specific reading deficits and divided them into two groups based on whether they had language delay (LD) or not (NoLD). LD and NoLD children showed similar, severe deficits in reading and spelling decoding, but only LD children showed a moderate impairment in reading comprehension. LD children were more impaired in phonological working memory and phonological fluency, as well as in semantic fluency, grammatical comprehension, and verbal IQ. These findings indicate the presence of a moderate but widespread linguistic deficit (not limited to phonological processing) in a subset of dyslexic children with previous language delay that does not generalize to all children with reading difficulties.