Crosslinguistic transfer in bilingual language acquisition has been widely reported in various linguistic domains (e.g., Döpke, 1998; Nicoladis, 1999; Paradis, 2001). In this study we examined structural overlap (Döpke, 2000; Müller and Hulk, 2001) and dominance (Yip and Matthews, 2000) as explanatory factors for crosslinguistic transfer in Persian–English bilingual children's production of novel compound words. Nineteen Persian monolinguals, sixteen Persian–English bilinguals, and seventeen English monolinguals participated in a novel compound production task. Our results showed crosslinguistic influence of Persian on English and of English on Persian. Bilingual children produced more right-headed compounds in Persian, compared with Persian monolinguals, and in their English task, they produced more left-headed compounds than English monolinguals. Furthermore, Persian-dominant bilinguals tended more towards left-headed compounds in Persian than the English-dominant group. These findings point to both structural overlap and language dominance as factors underlying crosslinguistic transfer.