To acquire representations of printed words, children must attend to the written form of a word and link this form with the word's pronunciation. When words are read in context, they may be read with less attention to these features, and this can lead to poorer word form retention. Two experiments with young children (ages 5-8 years) confirmed this hypothesis. In our experiments, children attempted to read words they could not previously read, during a self-teaching period, either in context or in isolation. Later they were tested on how well they learned the words as a function of self-teaching condition (isolation or context). Consistent with previous research, children read more words accurately in context than in isolation during self-teaching; however, children had better retention for words learned in isolation. Furthermore, this benefit from learning in isolation was larger for less skilled readers. This effect of poorer word retention when words are learned in context is paradoxical because context has been shown to facilitate word identification. We discuss factors that may influence this effect of context, especially the role of children's skill level and the demands of learning new word representations at the beginning of reading instruction.