Previous research into the cognitive processes involved in reading Chinese and developmental dyslexia in Chinese, revealed that the single most important factor appears to be orthographic processing skills rather than phonological skills. Also some studies have indicated that even in alphabetic languages some dyslexic individuals reveal deficits in orthographic processing skills, which are linked to a deficit in the visual magnocellular pathway. The current study therefore employed a visual psychophysical experiment together with visual and auditory event-related potential (ERP) experiments eliciting mismatch negativity (MMN) to investigate the link between visual magnocellular functional abnormalities and developmental dyslexia in Chinese. The performance levels of Chinese children with developmental dyslexia (DD) from the behavioural and electrophysiological experiments were compared to those of the chronological age-matched (CA) children and those of the reading level matched (RL) younger children. Both the behavioural and electrophysiological results suggest that the orthographic processing skills were compromised in the Chinese developmental dyslexics, which in turn is linked to a deficit in the visual magnocellular system. (Contains 3 tables and 5 figures.)