A previous study reported that, similar to young and adult skilled readers, Italian developmental dyslexics read pseudowords made up of a root and a derivational suffix faster and more accurately than simple pseudowords. Unlike skilled readers, only dyslexic and reading-matched younger children benefited from morphological structure in reading words aloud. In this study, we show that word frequency affects the probability of morpheme-based reading, interacting with reading ability. Young skilled readers named low- but not high-frequency morphologically complex words faster than simple words. By contrast, the advantage for morphologically complex words was present in poor readers irrespective of word frequency. Adult readers showed no facilitating effect of morphological structure. These results indicate that young readers use reading units (morphemes) that are larger than the single-grapheme grain size. It is argued that morpheme-based reading is important for obtaining reading fluency (rather than accuracy) in transparent orthographies and is useful particularly in children with limited reading ability who do not fully master whole-word processing.