Abstract Literacy is a contested word, as Brian Street said in his article “The meanings of literacy”, which appeared in 1999 in Literacy: an international handbook, the work he co-edited with Daniel Wagner and Richard Venezky. Its meaning varies across countries with different levels of schooling. There is also considerable variation in academic and popular senses of literacy. Dominant, formal, school literacies have had longstanding visibility in academic research and in official policies. However, there is now greater awareness and understanding of the discursive contrasts between school and home/community literacies, between dominant and vernacular literacies, between formal and informal literacies in the academy and in official policies. In this article, I distinguish between dominant discourses about literacy, on the one hand, and critical knowledge of literacy, on the other hand. I argue that they represent two very different perspectives in public debates on literacy. Taking account of the differences between these perspectives shows us how everyday life can be a space for struggle and contestation over meanings and for the construction of future discourses about literacy. I characterise the relationship between vernacular and dominant literacies by employing Jürgen Habermas’ constructs of lifeworld and systems, as he defined them in The theory of communicative action in 1987. I also employ part of the explanatory framework proposed for Critical Discourse Analysis by Lilie Chouliaraki and Norman Fairclough, in 1999, in Discourse in late modernity. In the central sections of the article, I then draw on ethnographic research, related to literacy, that I carried out in two socioeconomically differentiated neighbourhoods in Brazil. My discussion focuses on ideological issues related to literacy emerging from the ethnographic fieldwork in these two Brazilian neighbourhoods.