This study attempted to determine whether phonological decoding could be observed among severely and profoundly deaf children during reading. For this purpose, the ability of 20 deaf children to detect phonological similarities between three written pseudowords (a model item and two test items) was investigated. In the first condition, one of the test items was a homophone of the model (e.g., kise, kyse, kine). In the second condition, one of the test items had the same first syllable as the model item, as defined by its structure or by nasalization (e.g., lan.jier, lan.du, la.nud). The results demonstrated that deaf children with good speech levels, as well as hearing children matched on word reading level, were sensitive to homophony when visual proximity between the model and test items were controlled. They were also sensitive to syllabic structure when the first syllables were CV and in the nasalization condition. By contrast, deaf children with poor speech abilities did not show this pattern of results in all conditions. The possibility that the latter results could be explained by deaf children's sensitivity to orthographic frequency phenomena is discussed. A link between sensitivity to phonology in written language and speech skills is suggested, and the implications of those results for a general understanding of the reading processes of deaf children are presented.