Aloud reading of novel words is achieved by phonological decoding, a process in which grapheme-to-phoneme conversion rules are applied to “sound out” a word's spoken representation. Numerous brain imaging studies have examined the neural bases of phonological decoding by contrasting pseudoword (pronounceable nonwords) to real word reading. However, only a few investigations have examined pseudoword reading under both aloud and silent conditions, task parameters that are likely to significantly alter the functional anatomy of phonological decoding. Subjects participated in an fMRI study of aloud pseudoword, aloud real word, silent pseudoword, and silent real word reading. Using this two-by-two design, we examined effects of word-type (real words vs. pseudowords) and response-modality (silent vs. aloud) and their interactions. We found 1) four regions to be invariantly active across the four reading conditions: the anterior aspect of the left precentral gyrus (Brodmann's Area (BA) 6), and three areas within the left ventral occipitotemporal cortex; 2) a main effect of word-type (pseudowords > words) in left inferior frontal gyrus and left intraparietal sulcus; 3) a main effect of response-modality (aloud > silent) that included bilateral motor, auditory, and extrastriate cortex; and 4) a single left hemisphere extrastriate region showing a word-type by response-modality interaction effect. This region, within the posterior fusiform cortex at BA 19, was uniquely modulated by varying phonological processing demands. This result suggests that when reading, word forms are subject to phonological analysis at the point they are first recognized as alphabetic stimuli and BA 19 is involved in processing the phonological properties of words. Hum Brain Mapp, 2005. © 2005 Wiley-Liss, Inc.