This study investigates whether literacy skills are a distinct dimension of education that influences young adults’ health in the southeast African context of Malawi. It uses new data from Tsogolo la Thanzi, a study of young adults in southern Malawi, to achieve three aims. The first is descriptive: to demonstrate a direct assessment for measuring literacy in a population-based survey, and show that it captures variability in skills among young adults, including those with comparable levels of educational attainment. The second aim is to identify whether literacy influences young adults’ health—net of their educational attainment and other confounding factors. Multivariate analyses reveal that literacy is associated with two measures of physical health: self-rated health and prolonged sickness. Because literacy is a key determinant of health, the third aim is to provide insight into how to measure it: can commonly used indirect approaches to estimating literacy (e.g., based on educational attainment or self-reports), accurately capture its prevalence and relationship with health? In a second set of analyses, bivariate results show whether, and the extent to which, indirect measures of literacy overestimate literacy’s prevalence, and multivariate models assess whether indirect estimates of literacy capture its relationship with health. The findings support future efforts to incorporate literacy assessments into population surveys to accurately estimate literacy’s prevalence and health benefits, particularly in contexts like Malawi where access to high-quality schools remains limited.