The aim of the current study was to examine the role of morphological awareness (MA), in reading comprehension in second grade Hebrew-speaking students (n = 595). Three groups of readers (n = 595), formed according to the change in their derivational-awareness (DA) scores throughout the school year, were examined: Low-DA readers, improved-DA readers who exhibited improvement in their awareness throughout the year, and high-DA readers. Findings show that inflectional and derivational awareness were associated with higher reading comprehension in high-DA readers at both time points, and in improved-DA readers at the end of the year. Among low-DA readers, possessive inflections were correlated to higher scores in reading comprehension, in addition to word recognition and phonological decoding. Results suggest that young readers rely on different reading strategies, corresponding to the level of their MA development. Results are further discussed according to theoretical models.