The role of morphology in reading development was examined by measuring participants’ eye movements while they read sentences containing either a hyphenated (e.g., ulko-ovi “front door”) or concatenated (e.g., autopeli “racing game”) compound. The participants were Finnish second, fourth, and sixth graders (aged 8, 10, and 12 years, respectively). Fast second graders and all four and sixth graders read concatenated compounds faster than hyphenated compounds. This suggests that they resort to slower morpheme-based processing for hyphenated compounds but prefer to process concatenated compounds via whole-word representations. In contrast, slow second graders’ fixation durations were shorter for hyphenated than concatenated compounds. This implies that they process all compounds via constituent morphemes and that hyphenation comes to aid in this process.