A growing body of cross-linguistic research has suggested that morphological awareness plays a key role in both L1 and L2 word reading among bilingual readers. However, little is known about the interaction and development of L1 and L2 morphological awareness in relation to word reading. We addressed this issue by evaluating the unique contributions of L1 Chinese and L2 English morphological awareness to word reading in both Chinese and English across Grades 2 (N = 150), 5 (N = 158), and 8 (N = 159) Hong Kong Chinese–English bilingual children. Children completed five tasks of Chinese morphological awareness which tapped for compounding awareness, homophone awareness, homographic awareness, semantic radical awareness, and affix awareness, and six English morphological judgment and analogy tasks that assessed morphological awareness at three levels: inflection, derivation, and compounding. English phonological awareness, Chinese and English vocabulary, and nonverbal ability were measured as controls. Word reading was assessed in both languages. Within-language analyses revealed that Chinese morphological awareness accounted for 27, 22, and 12% of unique variances in Chinese word reading above the control measures in Grades 2, 5, and 8 respectively. In contrast, English morphological awareness explained small but significant unique variances in English word reading, i.e., 4, 8, and 2%, across Grades 2, 5, and 8 respectively. Critically, there were cross-language influences: Chinese morphological awareness explained 4% of unique variance in English word reading in Grade 2 after controlling for IQ, English vocabulary, English phonological awareness, and English morphological awareness; English morphological awareness explained significant variances in Chinese word reading, i.e., 4, 3, and 4% in Grades 2, 5, and 8 respectively, after the relevant controls. These findings suggest a bi-directional cross-language transfer of morphological awareness to word reading in L1 Chinese and L2 English. However, the direction of its transfer may be constrained by some language-specific morphological features.