The purpose of this research was to explore the level of perceptual processing being used by normal and educable mentally retarded beginning readers. The investigation tested the hypothesis that beginning readers show a positive relationship between word length and word recognition latency, implying serial processing. Data on accuracy and latency in reading words of different lengths was collected as well as comprehension data. Both mentally retarded and normal children took longer to read longer words than shorter words, implying letter-by-letter processing. Differences in accuracy and latency of word recognition were able to explain differences in comprehension. A possible implication is that aiding children in becoming fast, accurate decoders may facilitate comprehension. (Author/TS)