Word recognition mechanisms constitute an essential contribution to reading achievement in both deaf and hearing children. Little is known about how children with hearing impairment (HI) manage to read aloud words in the vowelled Arabic transparent script which provides full vowel information. This study aimed to compare word and pseudoword reading accuracy and speed between 32 Lebanese children with HI and 32 younger hearing Lebanese children. The two groups were carefully matched for reading comprehension and oral comprehension levels. Length, word frequency, and lexicality effects were assessed to characterize the functioning of the lexical and sublexical reading procedures. Reading errors were also analyzed to document reading difficulties in transparent Arabic orthography in the sublexical route. The results show significant effects of length, word frequency, and lexicality on reading accuracy and speed in both groups. They also indicate underdeveloped sublexical and lexical routes in children with HI who read less accurately and faster than the younger hearing children. Reading errors are numerous in children with HI. The data are discussed in light of the Dual Route Cascaded model. Suggestions are made about how to improve reading processes in children with HI.