Empirical evidence from masked priming research shows that skilled readers can rapidly identify morphological structure in written language. However, comparatively little is known about how and when this skill is acquired in children. The present work investigates the developmental trajectory of morphological processing in a two-year longitudinal study that involves two large cohorts of German and French primary school children. The masked priming paradigm was used within an experimental design that allowed us to dissociate effects of (i) non-morphological embedded word activation, (ii) morpho-orthographic decomposition, and (iii) morpho-semantics. Four priming conditions were used: affixed word (farmer-FARM), affixed nonword (farmity-FARM), non-affixed nonword (farmald-FARM), and unrelated control (workald-FARM). The results revealed robust embedded word priming effects across both languages. However, morphoorthographic and morpho-semantic effects were only evident in the French sample. These findings are discussed in the context of a theoretical framework that specifies the distinct roles played by embedded words and affixes, their distinct developmental trajectories, and how the intrinsic linguistic properties of a given language may impact on morphological processing.