In this article we examine the impact of pre‐colonial educated elites and colonization on modernization. Using the case of Joseon, as Korea was known before being colonized by Japan in 1910, we investigate how the civil exam system and scholarly traditions, as well as the provision of public schools under Japanese colonial rule, influenced levels of literacy in the colony. We introduce novel data from Joseon's historical court examination archives, colonial education records, and censuses dating back to 1930. Our findings suggest that the spread of Korean literacy during the early colonial period was strongly correlated with the historical presence of civil exam passers from the Joseon Dynasty. Regions with a greater presence of educated elites later had higher numbers of Korean teachers, as well as more private schools established as alternatives to the colonial public schools.