Heritage language and literacy development have been found to be influenced by a number of factors such as parental language use, socio-economic status, or home literacy experiences (Dixon et al., 2012; Hoff et al., 2012, 2014; Scheele, Leseman, & Mayo, 2010; Willard et al., 2015). In addition, the language and context of schooling are relevant for the development of the heritage language (Chondrogianni et al., 2019; Polinsky & Kagan, 2007). In the current study, we investigate the lexical and literacy skills in children attending two different educational settings. The receptive and productive vocabulary (nouns / verbs) was examined in German and in Italian in children in first and second grade attending (1) a bilingual Italian-German elementary school program (n = 39) and (2) Italian heritage language classes (n = 40) using the Crosslinguistic Lexical Task (CLT) in German and Italian (Rinker & Gagarina, 2014; Roch, 2014) as well as reading tests in Italian and German. The children’s language and sociodemographic background was assessed in a detailed parent questionnaire. Both groups show a larger German compared to the Italian vocabulary. During the first school year, all children show a large increase in their Italian vocabulary, particularly in noun development. With respect to reading, children in the bilingual program show better results than the children in heritage language classes. The findings highlight the various educational and environmental factors that shape lexical and literacy development in bilingual speakers and exemplify how the heritage language Italian can be fostered in different educational contexts.