Take a picture walk. Before they can read words, young children use picture cues to retell stories. Invite your toddler to describe what is happening in the illustrations of a favourite book. Ask lots of questions to hone his observation skills.
Make time to rhyme. Distinguishing sounds is an important component of literacy development. Reread a rhyming book a few times so that he can listen to the sound patterns and rhythm of the story. Encourage him to chime in as he learns the story, and to clap when the words rhyme.
Extend or create a story. This activity encourages creativity, language skills, and such important literary skills as developing a beginning, middle, and end of a story. Read a book and invite him to make up his own story about the main character, create a sequel to the story, or make up his own ending. You can also encourage him to make his own book by drawing a few illustrations.