Reading morphologically complex words requires analysis of their morphemic subunits (e.g., play + er); however, the positional constraints of morphemic processing are still little understood. The current study involved three unprimed lexical decision experiments to directly compare the positional encoding of stems and affixes during reading and to investigate the role of semantics during the position encoding of morphemes. Experiment 1 revealed that transposed compound words were harder to reject than their controls (e.g., dreamday vs. shadeday), whereas there was no difference between transposed suffixed words and their controls (e.g., fulpain vs. adepain). Experiment 2 replicated the results for transposed compound words of the first experiment and further showed that there was no difference between transposed prefixed words and their controls (e.g., qualifydis vs. qualifymis). Experiment 3 investigated the role of semantic transparency in morpheme transposition effects and revealed a larger morpheme transposition effect for semantically transparent transposed compound words (e.g., cuptea vs. taptea) than for semantically opaque transposed compound words (e.g., linedead vs. deskdead). These results bring to light important differences in the positional encoding of stems and affixes, suggesting that prefixes and suffixes are recognized in a position-dependent manner compared to the position-independent encoding of embedded stems and that morpheme transposition effects are guided by semantics. The current findings call for more clearly specified theoretical models of visual word recognition that reflect the distinct positional constraints of stems and affixes, as well as the influence of semantics on morphological processing.