During parafoveal processing, skilled readers encode letter identity independently of letter position (Johnson et al., 2007). In the current experiment, we examined orthographic parafoveal processing in readers with dyslexia. Specifically, the eye movements of skilled readers and adult readers with dyslexia were recorded during a boundary paradigm experiment (Rayner, 1975). Parafoveal previews were either identical to the target word (e.g., nearly), a transposed‐letter preview (e.g., enarly), or a substituted‐letter preview (e.g., acarly). Dyslexic and non‐dyslexic readers demonstrated orthographic parafoveal preview benefits during silent sentence reading and both reading groups encoded letter identity and letter position information parafoveally. However, dyslexic adults showed, that very early in lexical processing, during parafoveal preview, the positional information of a word's initial letters were encoded less flexibly compared to during skilled adult reading. We suggest that dyslexic readers are less able to benefit from correct letter identity information (i.e., in the letter transposition previews) due to the lack of direct mapping of orthography to phonology. The current findings demonstrate that dyslexic readers show consistent and dyslexic‐specific reading difficulties in foveal and parafoveal processing during silent sentence reading.