OBJECTIVE: This study examined the association between chronic illness and school readiness, by using linked administrative population data. METHODS: The sample included children born in 2003–2004 who were residing in Western Australia in 2009 and had a complete Australian Early Development Census record (N = 22 890). Health and demographic information was also analyzed for 19 227 mothers and 19 030 fathers. The impact of child chronic illness on 5 developmental domains (social, emotional, language, cognitive, and physical) at school entry was analyzed. Analyses examined the association between child developmental outcomes and chronic illness generally, single or multiple chronic illness diagnosis, and diagnosis type. Logistic regression models estimated odds ratios for each outcome, adjusted for child, parent, and community sociodemographic variables. RESULTS: In the adjusted models, children with a chronic illness had an increased risk of being classified as developmentally vulnerable on all domains, compared with children without a chronic illness (20%–35% increase in risk). There was no increased risk for children with multiple chronic illness diagnoses over those with a single diagnosis (all Ps > .05). There was no evidence of a disease-specific effect driving this risk. CONCLUSIONS: Regardless of the number or type of conditions, chronic illness in young children is a risk factor for reduced school readiness. These effects were seen for health conditions not traditionally considered detrimental to school readiness, such as chronic otitis media. Thus, the implications of a broader range of chronic health conditions in early childhood on school readiness need to be considered.