The current study investigated perceptual simulation and its relationship with literacy ability in Chinese children. Ninety-three third-grade Hong Kong Chinese children completed a sentence-picture verification task for perceptual simulation. In this task, a sentence mentioning an object was presented first, followed by a picture involving the object. The picture was either a perceptual match with the preceding sentence or a mismatch. The participants were asked to judge whether the object in the picture was mentioned in the preceding sentence. Literacy ability was measured by a Chinese character reading task. Model analysis revealed a significant mismatch effect: the children gave faster correct responses to the perceptually matched pictures than to the mismatched ones. Furthermore, the children with lower literacy abilities displayed larger mismatch effects than those with higher literacy abilities. The results suggest that children with lower literacy abilities may rely more heavily on reactivated perceptual representations in language comprehension.