Several studies have shown that parafoveal processing is essential in reading development. In this study, we explore the effect of transposing and substituting inner and outer letters in a flanker lexical decision task administered to 78 children and 65 adults. The results show a significant interaction between the Group factor and the Flanker factor, suggesting differences in the effects of flankers for children and adults. In the case of adults, transposed and substituted letters generated benefit of the same magnitude in comparison to the unrelated condition, but of lesser magnitude than the Identity condition. In the case of children, the results show facilitation for the transposed conditions of the same magnitude as the Identity condition. However, the substitution conditions failed to generate any benefit in comparison to the unrelated condition. The results for the adults are in line with the predictions of the open bigram model, while the results for the children are explained through a developmental perspective of the dual-route architecture and open bigram framework.