Building upon the prosodic transfer hypothesis, the current study aims to examine the intermediary effect of English stress on the relation between Chinese lexical tone awareness and English word-level literacy (reading and spelling) as well as the moderating effect of English oral vocabulary proficiency on the cross-linguistic association. Grade 4 Chinese learners of English (N = 224) participated in this study and were assessed for their tone and stress sensitivity, English oral vocabulary, English word reading, and English word spelling. Mediated multivariate analyses with moderation were used to explore: (1) whether the influence of lexical tone perception on L2 word reading and spelling was mediated by English stress as posited in the prosodic transfer hypothesis; (2) whether the effects of tone on English word reading and spelling performance varied as a function of oral vocabulary levels. The findings revealed a direct positive relationship between Chinese tone and English word reading and spelling, and the relationship was mediated by English stress awareness. Furthermore, the direct pathway from tone to English word-level literacy skills were moderated by oral vocabulary and the relationship between tone and English word-level skills became stronger as oral vocabulary levels increased; however, such strength reached a plateau among children without adequate oral vocabulary skills. These findings suggest the necessity to incorporate word spelling as an outcome in the cross-suprasegmental phonological transfer models of early literacy development. Additionally, the current study endorses the complexity of cross-language prosodic transfer. It points to a precise threshold for sufficient L2 oral vocabulary skills to enable tone transfer in English word-level literacy attainment.