We employed self-paced reading and event-related potential measures to investigate how adults of varying literacy levels use sentence context information when reading. Community-dwelling participants read strongly and weakly constraining sentences that ended with expected or unexpected target words. Skilled readers showed N400s that were graded by the cloze probability of the targets, with larger N400s for more unexpected words. Moreover, it took these participants longer to read unexpected targets in strongly than weakly constraining sentences, suggesting a processing cost for revising predictions. Among less skilled readers, a reliable N400 difference was found between expected and unexpected targets only for the strongly constraining sentences. They also took longer when targets were unexpected, regardless of the context. These findings suggest that lower literacy readers could only immediately take advantage of strongly constraining context information to facilitate word processing and that they do not make as much use of predictive processing during comprehension.