In order to separate the cognitive processes associated with phonological encoding and the use of a visual word form lexicon in reading, it is desirable to compare the processing of words presented in a visually familiar form with words in a visually unfamiliar form. Japanese Kana orthography offers this possibility. Two phonologically equivalent but visually dissimilar syllabaries allow the writing of, for example, foreign loanwords in two ways, only one of which is visually familiar. Familiarly written words, unfamiliarly written words, and pseudowords were presented in both Kana syllabaries (yielding six conditions in total) to participants during an fMRI measurement with a silent articulation task (Experiment 1) and a phonological lexical decision task (Experiment 2) using an event-related design. Consistent over two experimental tasks, the three different stimulus types (familiar, unfamiliar, and pseudoword) were found to activate selectively different brain regions previously associated with phonological encoding and word retrieval or meaning. Compatible with the predictions of the dual-route model for reading, pseudowords and visually unfamiliar words, which have to be read using phonological assembly, caused an increase in brain activity in left inferior frontal regions (BA 44/47), as compared to visually familiar words. Visually familiar and unfamiliar words were found to activate a range of areas associated with lexico-semantic processing more strongly than pseudowords, such as the left and right temporo-parietal region (BA 39/40), a region in the left middle/inferior temporal gyrus (BA 20/21), and the posterior cingulate (BA 31).