Vocabulary growth was suggested to prompt the implementation of increasingly finer-grained lexical representations of spoken words in children (e.g., [Metsala, J. L., & Walley, A. C. (1998). "Spoken vocabulary growth and the segmental restructuring of lexical representations: precursors to phonemic awareness and early reading ability." In J. L. Metsala & L. C. Ehri (Eds.), "Word recognition in beginning literacy" (pp. 89-120). Hillsdale, NJ: Erlbaum.]). Although literacy was not explicitly mentioned in this lexical restructuring hypothesis, the process of learning to read and spell might also have a significant impact on the specification of lexical representations (e.g., [Carroll, J. M., & Snowling, M. J. (2001). "The effects of global similarity between stimuli on children's judgments of rime and alliteration." "Applied Psycholinguistics, 22," 327-342.]; [Goswami, U. (2000). Phonological representations, reading development and dyslexia: Towards a cross-linguistic theoretical framework. "Dyslexia, 6," 133-151.]). This is what we checked in the present study. We manipulated word frequency and neighborhood density in a gating task (Experiment 1) and a word-identification-in-noise task (Experiment 2) presented to Portuguese literate and illiterate adults. Ex-illiterates were also tested in Experiment 2 in order to disentangle the effects of vocabulary size and literacy. There was an interaction between word frequency and neighborhood density, which was similar in the three groups. These did not differ even for the words that are supposed to undergo lexical restructuring the latest (low frequency words from sparse neighborhoods). Thus, segmental lexical representations seem to develop independently of literacy. While segmental restructuring is not affected by literacy, it constrains the development of phoneme awareness as shown by the fact that, in Experiment 3, neighborhood density modulated the phoneme deletion performance of both illiterates and ex-illiterates.