Purpose: The first purpose of this study was to explore the use of a whole class, test–teach–test, dynamic assessment of narratives for identifying participants. The second purpose was to examine the efficacy of a Tier 2 narrative language intervention for culturally and linguistically diverse preschoolers. Method: A dynamic assessment was conducted with students from 3 Head Start classrooms. On the basis of the results of the dynamic assessment, 22 children were randomly assigned to treatment (n = 12) and control (n = 10) groups for intervention. Participants received a small-group (4:1), differentiated, narrative intervention for 15–20 min, twice a week, for 9 weeks. Interventionists used weekly progress monitoring data to explicitly focus on individualized narrative and linguistic targets. Results: The treatment group showed significant improvement over the control group on proximal and distal measures of narrative retells, with large effect sizes. Group differences on a measure of children's language in the context of personal stories were not statistically significant. Conclusions: This early-stage study provides evidence that narrative language intervention is an effective approach to improving the language skills of preschoolers with diverse language needs. Furthermore, the evidence supports the use of dynamic assessment for reducing overidentification and identifying candidates for small-group language intervention.