Much of the debate regarding literacy development in deaf and hard-of-hearing readers surrounds whether there is dependence on phonological decoding of print to speech for such readers, and the literature is mixed. While some reports of deaf children and adults demonstrate the influence of speech-based processing during reading, others find little to no evidence of speech-sound activation. In order to examine the role of speech-based phonological codes when reading, we utilized eye-tracking to examine eye-gaze behaviors employed by deaf children and a control group of hearing primary-school children when encountering target words in sentences. The target words were of three types: correct, homophonic errors, and nonhomophonic errors. We examined eye-gaze fixations when first encountering target words and, if applicable, when rereading those words. The results revealed that deaf and hearing readers differed in their eye-movement behaviors when re-reading the words, but they did not demonstrate differences for first encounters with the words. Hearing readers treated homophonic and nonhomophonic error words differently during their second encounter with the target while deaf readers did not, suggesting that deaf signers did not engage in phonological decoding to the same degree as hearing readers did. Further, deaf signers performed fewer overall regressions to target words than hearing readers, suggesting that they depended less on regressions to resolve errors in the text.