In today’s globalized world, teaching intercultural competence in educational contexts is of great importance. The potential of foreign language literary texts has been emphasized repeatedly. The present study investigates the value of a content and language integrated learning (CLIL) approach to the teaching of literature in foreign language classrooms for the simultaneous development of intercultural competence and foreign language reading proficiency. An intervention based on integrated intercultural literary pedagogy (IILP) was developed. This longitudinal quasi-experimental study examined the effects of the IILP treatment in a sample of 274 Dutch secondary school students (from seven schools) who were learning Spanish as a foreign language using a switch replication design with two conditions. Three Spanish novels were read in both conditions in two consecutive school years. For the experimental condition, students performed dialogical tasks based on IILP pedagogical principles; for the control condition, the tasks consisted of comprehensive reading questions. Multilevel analysis of the data revealed that the students in the experimental condition significantly improved their intercultural competence when compared with the students in the control condition. For reading proficiency, main effects were found in both conditions. The results demonstrate that a CLIL approach adds considerably to intercultural development; a broad inclusion of literary texts in foreign language teaching environments is therefore recommended.