Pseudoword (non-word) reading tasks are a commonly used measure of phonological processing across diverse fields of reading research. However, whether pseudoword reading gives any more information about phonological processing in young learner readers than does the reading of real words has seldom been considered. Here we show that pseudoword and real word reading are so strongly correlated (r=0.94) in the first 4 years of school as to be representative of the same construct. Two of the subskills of phonological processing, phonological awareness and rapid automatic naming also predict almost identical amounts of variance in pseudoword and real word reading. A divergence in the correlations between word and pseudoword reading and phonological awareness and rapid naming only emerges in the fourth year, while a significant correlation between phonological awareness and rapid automatic naming is evident only in the first year of schooling. Thus these results suggest that, at least in young children learning to read, care should be taken when using pseudoword reading to measure either phonological processing ability or phonological awareness as this may misinform the choice of therapy for a child showing symptoms of dyslexia.