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Background: Physical literacy is essential to physical activity across the lifespan. While there is an emerging body of research on physical literacy in school-aged children, the preschool years have largely been ignored. We tested the psychometric properties of the new tool, the Preschool Physical Literacy Assessment Tool (Pre-PLAy) designed to address this gap.Methods: We recruted 78 children (aged 19–49 months) across 5 childcare centers in Hamilton, Ontario. Two Early Childhood Educators (ECE) completed the Pre-PLAy for each child at two points in time to assess inter-rater reliability and test-retest reliability. We assessed the agreement between the Pre-PLAy tool with gross motor skills and the ability of the PPLAy to predict physical activity.Results: Results indicated Pre-PLAy is related to gross motor skills and predictive of physical activity for females, but not males. Inter-rater and intra-rater reliability was at least adequate for all but the coordinated movements items and scale for females, but ECEs showed poor agreement for males.Conclusions: These results suggest initial support for the Pre-PLAy tool as a measure of physical literacy during the early years. However, some modification to the items and training are required to address the gender-specific effects found in this sample.