Abstract Under difficult viewing conditions, a letter in a familiar word can be perceived more accurately than the same letter alone or in a string of unrelated letters. Sophisticated Guessing Theory asserts that perception is more accurate when a letter appears in a word because its identity is constrained by the identity of neighboring context letters. Experiment 1 tested the following prediction: A letter in a word should be perceived more accurately in strongly constraining word contexts than in weakly constraining word contexts. No such trend was found using a number of different measures of contextual constraint and perceptual accuracy. Experiment 2 verified that, with the same conditions used in Experiment 1 to test Sophisticated Guessing Theory, a strong perceptual advantage could be obtained for letters in words vs. letters alone or in unrelated-letter strings. Several alternative theories of word perception are discussed. The most attractive asserts that for words an additional higher-level perceptual code is formed that is more resistant to degradation than the code formed for letters.