The processing of abbreviations in reading was examined with an eye movement experiment. Abbreviations were of 2 distinct types: acronyms (abbreviations that can be read with the normal grapheme-phoneme correspondence [GPC] rules, such as NASA) and initialisms (abbreviations in which the GPCs are letter names, such as NCAA). Parafoveal and foveal processing of these abbreviations was assessed with the use of the boundary change paradigm (K. Rayner, 1975). Using this paradigm, previews of the abbreviations were either identical to the abbreviation (NASA or NCAA), orthographically legal (NUSO or NOBA), or illegal (NRSB or NRBA). The abbreviations were presented as capital letter strings within normal, predominantly lowercase sentences and also sentences in all capital letters such that the abbreviations would not be visually distinct. The results indicate that acronyms and initialisms undergo different processing during reading and that readers can modulate their processing based on low-level visual cues (distinct capitalization) in parafoveal vision. In particular, readers may be biased to process capitalized letter strings as initialisms in parafoveal vision when the rest of the sentence is normal, lowercase letters. (Contains 2 tables and 6 footnotes.)