Your preschooler is almost ready to read! And, if you have been reading aloud to them, they are anxious to try out new skills. Work with them on the early literacy skills listed on this site. Do activities that teach how to look from left-to-right on the page, and from top to bottom. Keep pointing out words on signs and in everyday life. Work daily, through play, at remembering letters and recognizing sounds.
Keep reading aloud to your preschooler. Pick out the books together (but know that rereading is still popular at this age.) Ask questions throughout the book -- "What do you think happens next?" Let your preschooler tell her own version of the book using the pictures. Then read the words to see if the stories are alike (your preschooler's might be more imaginative and creative.)
Do activities that go along with the book. Make a craft or draw a picture that retells the story. Keep pointing out the letters as you read (but don't interrupt a good tale.) Use your finger along the bottoms of words so that they continue to be aware of print vs. meaning. Find some good repeating books so the two of you can shout the rhyming choruses together. Let your preschooler read a book to you she has memorized.
What kind of books does your preschooler want to read? Preschoolers have a great sense of humor and love to laugh and be silly. They are ready for books that tell a story. It is a good time to read books about kids their age that show similarities and differences -- as well as teach about basic friendships they will start to have in school. They are ready to learn about everything -- so read about cars and animals and people in the community. Pick some books that teach counting and some that work on vocabulary (through work with letters or rhymes.)