Morpheme-based literacy training programs are widely used in German primary schools. This study investigated whether (1) morphological training is effective early in development (Grade 2) and (2) literacy gains can be attributed to advanced morphological processing. Fifty-two German-speaking second-graders participated in an eight-week morpheme-based training program, while an age-matched control group (n = 41) attended regular language classes. All children completed spelling, reading and morphological awareness tasks and participated in a masked primed lexical decision experiment, once before training, and then again following training. We observed training effects for spelling and reading morphologically complex words, with bigger increases in the intervention than the control group. In addition, the masked priming results revealed that lexical decision times decreased more strongly in the intervention than the control group, but there was no clear training impact on the pattern of morphological priming. However, the performance on standardized reading tests and a morphological awareness task did not differ across participant groups. Thus, while written language processing improved, it is unclear whether these effects can be attributed to morphological processing or rather general gains in orthographic knowledge.