The interpretation of nonlexicalized compound words in English by speakers of English as a second language (ESL) was investigated. Three types of competence used in interpreting noun compounds are identified: pragmatic, linguistic, and textual. The use of these three types of competence by Hebrew speaking college students enrolled in ESL reading courses was tested with compounds selected from newspaper and magazine articles on scientific topics. The compounds were presented either isolated or in context. The results demonstrated that ESL speakers use the three types of competence as needed to interpret compound nouns. The nonnative English speaker minimizes first language transfer once context is available that makes it possible to employ textual or pragmatic competence. Effective strategies for noun compound interpretation are suggested by the results. The results are tabulated in an appendix. (RW)