We investigated whether children with dyslexia show enhanced semantic involvement as compensation for deficient phonological processing during reading. Phonological and semantic processing during reading and moderating effects of word frequency and word length in children with and without dyslexia were examined using a picture–word priming paradigm. Participants were 61 children with dyslexia and 50 typical readers in Grade 6 of primary school. Primes were either semantically or phonologically (shared onset and rime) related or unrelated to their target word. Results showed that priming effects were stronger in children with dyslexia than in typical readers in the semantic condition but did not differ between groups in the phonological condition. Overall, word length and word frequency effects were stronger for children with dyslexia than for typical readers, but word length and word frequency did not affect priming effects differently for the two groups. In both groups, only semantic priming effects were stronger for low-frequency longer words. Finally, individual word and pseudoword reading efficiency correlated with priming effects only in the semantic condition and only in children with dyslexia. It can be concluded that children with dyslexia, compared with typical readers, rely more on semantic information in word reading but do not show deficient phonological activation during reading compared with typical readers.