The goal of this study was to investigate the effect of Chinese-specific morphological awareness on vocabulary acquisition among young Chinese-speaking students. The participants were 288 Chinese-speaking second graders from three different cities in China. Multiple regression analysis and mediation analysis were used to uncover the mediated and unmediated effects of morphological awareness on reading vocabulary knowledge. Results showed that both morphological awareness and lexical inference ability significantly contributed to reading vocabulary knowledge after each factor was controlled for. The ability to extract sublexical morphological information (in the form of derivational awareness and compound awareness) significantly predicted the students' reading vocabulary. More importantly, the study revealed that morphological awareness made a significant indirect contribution to reading vocabulary via lexical inference ability. Findings suggest that morphological awareness enhances young Chinese students' reading vocabulary acquisition by the partial mediation of their lexical inference ability.