The present study investigated the role of Arabic diacritics in word recognition and their impact on Arabic L2 learners' reading speed, accuracy, and comprehension at different stages of Arabic L2 acquisition. Fifty-four English L2 learners of Arabic from 3 proficiency levels (beginner, intermediate, and advanced) participated in the study. They belonged to 2 sets of groups: half with exposure to instructional materials containing diacritics, vowelized textbook (VT), and the other half with exposure to instructional materials not containing diacritics, un-vowelized textbook (UVT). Participants performed word-list reading, text reading, and target-word comprehension tasks under vowelized (V) and un-vowelized (UV) conditions. The results revealed participants in all VT groups did consistently better than their UVT counterparts. This positive role of diacritics in terms of Arabic word recognition and reading performance implies that inclusion of diacritics in words and texts within instructional materials does not only benefit Arabic L2 learners by removing ambiguity from words, but it also positively impacts their reading and pronunciation performance in general. The study findings and pedagogical implications are also relevant to other languages, such as Farsi and Hebrew, which exhibit similar orthographic features.