Two experiments were carried out to compare the development of phonological receding procedures in children learning to read English and German. Reading of nonwords that sound like real words, so-called pseudohomophones (e.g., faik), was compared to both reading of nonwords that were orthographically and phonologically similar to real words (e.g., dake) and reading of nonwords that were orthographically and phonologically dissimilar (e.g., koog). Data were obtained for 7-, 8-, and 9-year-old English and German children in naming (Experiment 1) and for 8- and 9-year old children in lexical decision (Experiment 2). In naming, significant pseudohomophone (PsH) effects were found in English but not in German. In lexical decision, in contrast, significant PsH effects were found in German, but not in English. These results are interpreted in terms of the levels of orthography and phonology that underlie the reading procedures being developed by children who are learning to read more and less transparent orthographies. (C) 2001 Academic Press.