This study uses a discontinuous-linear regression methodological approach to test the Linguistic Threshold Hypothesis (LTH). Specifically, we investigate the following hypotheses: (1) the rate of transfer of literacy skills from L1 to L2 is a function of L2 oral language ability, (2) the rate of transfer from L1 to L2 accelerates when students cross a specified threshold(s) of L2 language oral ability, and (3) discontinuous change-point regression models fit the data better than linear regression interaction models. Across literacy skills, discontinuous change-point regression models revealed levels of L2 oral language at which transfer from L1 to L2 literacy was maximized, suggesting that the relationship between L2 language and cross-linguistic transfer is not constant for the young Spanish–English bilinguals in our study. Further, discontinuous change-point regression models fit the data better than linear interaction models, suggesting the importance of using models that better match the theoretical assumptions underpinning the LTH.