In three grammatical decision experiments, we examined the impact of alternating letter case on sentence reading to determine the locus of case-alternation effects. Experiments 1 and 2 compared grammatical decision responses (“Is this a grammatically correct sequence of words or not?”) in three different conditions: (1) SAME CASE/same case; (2) alternating CASE between WORDS; and (3) aLterNaTing cAsE wItHin WoRdS. For the grammatically correct sequences, we observed significantly faster responses in the same-case conditions compared with the between-word case manipulation, as well as a significant advantage for the between-word condition compared with within-word alternating case. These results confirm that case-alternation deteriorates sentence reading, but more so at the level of single word processing (within-word alternation) than at the sentence level (between-word alternation). Experiment 3 demonstrated that between-word case-alternation facilitates sentence processing compared with an all-lowercase condition when betweenWORDspacesAREremoved. Therefore, in the absence of between-word spacing, case changes across words facilitate sentence processing, possibly by guiding readers’ eyes to optimal locations for word identification.