The responses of 84 children (42 in kindergarten and 42 in first grade) while trying to identify sight words that were similar in sound (bowl/pole), similar in sound and shape (boat/boot), or dissimilar (cup/moon) yielded information about phonetic composition as a source of information by which beginning readers identify sight words. The responses occurred under both auditory and pictorial stimulus conditions. The results show that in the auditory condition correct responses occur more frequently when words are similar in sound and shape, while in the pictorial condition correct responses occur more frequently for words similar in sound only. Mental age was related to more correct responses for all three classes of words. These findings suggest that the selection of reading materials, approaches, and strategies should reflect the attitude that reading is not just a visual activity, and that teachers should attend to the listening skills of beginning readers as well. (RL)