The present review summarizes research investigating how words are identified parafoveally (and foveally) in reading. Parafoveal and foveal processing are compared when no other concurrent task is required (e.g., in singleword recognition tasks) and when both are required simultaneously (e.g., during reading). We first review methodologies used to study parafoveal processing (e.g., corpus analyses and experimental manipulations, including gaze-contingent display change experiments such as the boundary, moving window, moving mask, and fast priming paradigms). We then turn to a discussion of the levels of representation at which words are processed (e.g., orthographic, phonological, morphological, lexical, syntactic, and semantic). Next, we review relevant research regarding parafoveal processing, summarizing the extent to which words are processed at each of those levels of representation. We then review some of the most controversial aspects of parafoveal processing, as they relate to reading: (1) word skipping, (2) parafoveal-on-foveal effects, and (3) n + 1 and n + 2 preview benefit effects. Finally, we summarize two of the most advanced models of eye movements during reading and how they address foveal and parafoveal processing.