Masked priming studies have shown that readers decompose morphologically complex words ("read+er"). Interindividual differences have been suggested to affect this phenomenon. However, its development is poorly understood. We addressed this issue by taking a longitudinal approach that allows greater rigor in establishing the relationship between grade, reading skill, and morphological priming. A masked priming lexical decision task with suffixed words ("kleidchen-KLEID"), suffixed nonwords ("kleidtum-KLEID"), non-suffixed nonwords ("kleidekt-KLEID") and unrelated primes ("träumerei-KLEID") was administered to 98 children in grade 2, and again in grade 3 and 4 of elementary school. Reading skill was measured at each testing point. Grade and reading skill were associated with distinct patterns of priming: all priming effects increased with reading skill, whereas priming from non-suffixed nonwords decreased with grade. This suggests that the ability to identify stems can be associated with reading skills, while sensitivity to affixes is acquired over grades.