Within the Structural Equation Modeling framework, this study tested the direct and indirect effects of morphological awareness and lexical inferencing ability on L2 vocabulary knowledge and reading comprehension among advanced Chinese EFL readers in a university in China. Using both regular z-test and the bootstrapping (data-based resampling) methods, the study found that morphological awareness contributed to L2 vocabulary knowledge directly and indirectly through the mediation of learners' lexical inferencing ability. It was also observed that morphological awareness made no significant unique or direct contribution to reading comprehension after adjusting for vocabulary knowledge; its indirect effects on reading comprehension, however, were significant, both through the mediation of vocabulary knowledge alone, and the multiple mediations of lexical inferencing ability and vocabulary knowledge.