The involvement of the left hemisphere occipito-temporal (OT) junction in reading has been established, yet there is current controversy over the region's specificity for reading and the nature of its role in the reading process. Recent neuroimaging findings suggest that the region is sensitive to orthographic familiarity [Kronbichler, M., Bergmann, J., Hutzler, F., Staffen, W., Mair, A., Ladurner, G., Wimmer, H. 2007. Taxi vs. Taksi: on orthographic word recognition in the left ventral occipito-temporal cortex. Journal of Cognitive Neuroscience 19, 1-11], and the present study tested that hypothesis. Using fMRI, the OT region and other regions in the reading network were localized in 28 adult, right-handed participants. The BOLD signal in these regions was measured during a phonological judgment task (i.e., "Does it sound like a word?"). Stimuli included words, pseudohomophones (phonologically familiar yet orthographically unfamiliar), and pseudowords (phonologically and orthographically unfamiliar) that were matched on lexical properties including sublexical orthography. Relative to baseline, BOLD signal in the OT region was greater for pseudohomophones than for words, suggesting that the region is sensitive to orthographic familiarity at the whole-word level. Further contrasts of orthographic frequency within the word condition revealed increased BOLD signal for low- than high-frequency words. Specialization in the OT region for recognition of frequent letter strings may support the development of reading expertise. Additionally, BOLD signal in the OT region correlates positively with reading efficiency, supporting the idea that this region is a skill zone for reading printed words. BOLD signal in the IFG and STG correlates negatively with reading efficiency, indicating that processing effort in these classic phonological regions is inversely related to reading efficiency.