The relationship between brain activity and reading acquisition has been a research focus in recent years. In the current cross-sectional and longitudinal study, we aimed to investigate whether and how resting-state (rs) and task-state brain electrophysiological activity would predict children’s reading ability. Here, we tracked 73 primary school children’ orthographic awareness, reading ability, and EEG signals during both rest and completed a Chinese character recognition task over two consecutive years. Our analyses reveled these neurophysiological measures (rs-EEG power in theta/delta bands and N170 amplitude) significantly predicted orthographic awareness in both cross-sectional and longitudinal analyses. Mediation analysis revealed that these neurophysiological measures influenced reading ability by affecting children's orthographic awareness. Importantly, age moderated these effects: the predictive effect of rs-EEG power was stronger in younger children and decreased with age, whereas the effect of N170 amplitude showed the opposite pattern, becoming more prominent as age increased. Collectively, these findings indicate that children's reading performance is shaped by age-sensitive brain neurophysiological activity, with orthographic processing potentially serving as a key cognitive mechanism.