The present study combined magnetoencephalography recordings with fast periodic visual stimulation to investigate automatic neural responses to morphemes in developing and skilled readers. Native English-speaking children and adults were presented with rapid streams of base stimuli interleaved periodically with oddballs. In a manipulation-check condition, tapping into word recognition, oddballs featured familiar words embedded in a stream of consonant strings. In the experimental conditions, the contrast between oddball and base stimuli was manipulated in order to probe selective stem and suffix identification (...) in morphologically structured pseudowords. Neural responses at the oddball frequency and harmonics were analyzed at the sensor level using non-parametric cluster-based permutation tests. As expected, results in the manipulation-check condition revealed a word-selective response reflected by a predominantly left-lateralized cluster that emerged over temporal, parietal, and occipital sensors in both children and adults. However, across the experimental conditions, results yielded a differential pattern of oddball responses in developing and skilled readers. Children displayed a significant response that emerged in a mostly central occipital cluster for the condition tracking stem identification in the presence of suffixes. In contrast, adult participants showed a significant response that emerged in a cluster located in central and left occipital sensors for the condition tracking suffix identification in the presence of stems. The present results suggest that while the morpheme identification system in Grade 5–6 children is not yet adult-like, it is sufficiently mature to automatically analyze the morphemic structure of novel letter strings. These findings are discussed in the context of theoretical accounts of morphological processing across reading development. (shrink)