Previous research has shown that prior exposure to a word’s substitution neighbor earlier in the same sentence can disrupt processing of that word, indicating that interword lexical priming occurs naturally during reading, due to the competition between lexical candidates during word identification. Through the present research, we extended these findings by investigating the effects of prior exposure to a word’s transposed-letter neighbor (TLN) earlier in a sentence. TLNs are constituted from the same letters, but in different orders. The findings revealed an inhibitory TLN effect, with longer total reading times for target words, and increased regressions to prime and target words, when the target followed a TLN rather than a control word. These findings indicate that prior exposure to a TLN can disrupt word identification during reading. We suggest that this is caused by a failure of word identification, due to the initial misidentification of the target word (potentially as its TLN) triggering postlexical checking.