Despite the growing evidence of the language and literacy benefits of collaborative discussions for English language learners, the factors contributing to productive discussions that promote ELLs’ positive language outcomes are less understood. This study examined the influence of teacher talk, students’ initial language and literacy skills, and home language backgrounds on the discussion proficiency of four groups participating in eight peer-led literature discussions, called collaborative reasoning (CR), in two 5th-grade classrooms serving mainly Spanish-speaking ELLs. Levels of discussion proficiency were determined using a holistic rating approach and utterance-by utterance coding of discourse features. Teachers’ scaffolding moves were coded. Students’ pre- and post-intervention language and literacy skills and home language backgrounds were assessed. Results showed greater group variation in discussion proficiency in the mainstream class than in the bilingual class. The two teachers differed in their ways of facilitating CR discussions. Group discussion proficiency was associated with oral English skills (sentence grammar) and reading comprehension, as well as student English language use at home and parental assistance with homework. The talk volume and indicators of high-level comprehension such as articulating and responding to alternative perspectives, elaborations, extratextual connections, and uses of textual evidence were associated with post-intervention language and literacy outcomes. These findings contribute to the understanding of sources of variations in discussion proficiency among groups composed predominantly of ELLs and provide implications for teacher scaffolding strategies to facilitate ELLs’ learning and participation in classroom discussions.