Effects reflecting serial within-word processing are frequently found in pseudo- and non-word recognition tasks not only among fluent, but especially among dyslexic readers. However, the time course and locus of these serial within-word processing effects in the cognitive hierarchy (i.e., orthographic, phonological, lexical) have remained elusive. We studied whether a subject’s eye movements during a lexical decision task would provide information about the temporal dynamics of serial within-word processing. We assumed that if there is serial within-word processing proceeding from left to right, items with informative beginnings would attract the gaze position and (micro-)saccadic eye movements earlier in time relative to those with informative endings. In addition, we compared responses to word, non-word, and pseudo-word items to study whether serial within-word processing stems mainly from a lexical, orthographic, or phonological processing level, respectively. Gaze positions showed earlier responses to anomalies located at pseudo- and non-word beginnings rather than endings, whereas informative word beginnings or endings did not affect gaze positions. The overall pattern of results suggests parallel letter processing of real words and rapid serial within-word processing when reading novel words. Dysfluent readers’ gaze position responses toward anomalies located at pseudo- and non-word endings were delayed substantially, suggesting impairment in serial processing at an orthographic processing level.