This experimental research study was conducted to determine the effects of literature circles on 2nd year baccalaureate students’ reading comprehension skills. The sample consisted of two classes of second year baccalaureate Arts stream students studying at the same public high school. The classes which were chosen for either the experimental and control group were pretested using a reading comprehension text test. The treatment lasted for a period of eight weeks. After the experiment, participants were then post-tested using the same test scale. Students who underwent the treatment (literature circles) were randomly assigned to groups of seven or eight students, and were given a role to assume and a short story to read. After reading the story independently and completing their role sheets, students discussed the story within their small groups. The data collected were subjected to descriptive and inferential statistical analyses. The results of the study indicated that there was a positive effect of literature circles on reading comprehension skills (summarizing, inferencing, and paraphrasing); the experimental group gained higher scores on the short answer-test compared to the control group. The results were interpreted using the t-test for independent samples. The t-test revealed that the difference between students who were exposed to the use of literature circles and those who were taught in the ordinary way was significant.