Behavioral studies have shown that short letter strings are read faster than long letter-strings and words are read faster than nonwords. Here, we describe the dynamics of letter-string length and lexicality effects at the cortical level, using magnetoencephalography, during a reading task in Finnish with long (eight-letter) and short (four-letter) word/nonword stimuli. Length effects were observed in two spatially and temporally distinct cortical activations: (1) in the occipital cortex at about 100 msec by the strength of activation, regardless of the lexical status of the stimuli, and (2) in the left superior temporal cortex between 200 and 600 msec by the duration of activation, with words showing a smaller effect than nonwords. A significant lexicality effect was also evident in this later activation, with stronger activation and longer duration for nonwords than words. There seem to be no distinct cortical areas for reading words and nonwords. The early length effect is likely to be due to the low-level visual analysis common to all stimulus letter-strings. The later lexicality and length effects apparently reflect converging lexico-semantic and phonological influences, and are discussed in terms of dual-route and single-route connectionist models of reading.