The majority of naturalistic reading occurs within passages. Therefore, it is important to understand how reading in context affects the division of labor between semantic and orthographic processing. However, it is difficult to compare the cognitive processes elicited by reading in context and lists because of the perceptual differences that define them. In 2 experiments, undergraduate students read 72 different words divided across three conditions (context, semantic-list, and orthographic-list). Participants then completed a memory task that was used to estimate either the semantic processing (surprise recall; Experiment 1) or orthographic processing (word stem completion; Experiment 2) elicited during reading. In both experiments, memory performance for words read in context more closely resembled words read in the semantic-list condition and differed greatly from those read in the orthographic-list condition. We interpret these results as showing that contextual reading biases the division of labor toward semantic processing and away from orthographic processing.