Given that there are no spaces between words in Chinese, how words are segmented when reading is something of a mystery. Four Chinese characters, which either constituted one 4-character word or two 2-character words, were shown briefly to subjects. Subjects were quite accurate in reporting the 4-character word, but could usually only report the first 2-character word, demonstrating that word segmentation influences character recognition. The results suggest that even with these simple 4-character strings, there is an element of seriality in reading Chinese words: processing is initially focused at least to some extent on the first word. We also found that the processing of characters that are not consistent with the context is inhibited, suggesting inhibition from word representations to character representations. A simple model of Chinese word segmentation and word recognition is presented to account for the data. (Contains 4 tables and 9 figures.)