Using data from the Longitudinal Surveys of Australian Youth (LSAY), this briefing paper explores the impact of literacy and numeracy levels on the educational gap between Indigenous and non-Indigenous youth. The paper focuses on the early post-school outcomes of Indigenous and non-Indigenous young people between 1999 and 2007. Raising the levels of literacy and numeracy for Indigenous youth would help to improve some of their educational outcomes. However, many Indigenous young people face multiple disadvantages, such as poor access to post-school education and poor health, in addition to low literacy and numeracy levels, which subsequently affect their outcomes.