Using Dynamic Causal Modeling (DCM) and functional magnetic resonance imaging (fMRI), we examined effective connectivity between three left hemisphere brain regions (inferior frontal gyrus, inferior parietal lobule, fusiform gyrus) and bilateral medial frontal gyrus in 12 children with reading difficulties (M age=12.4, range: 8.11-14.10) and 12 control children (M age=12.3, range: 8.9-14.11) during rhyming judgments to visually presented words. More difficult conflicting trials either had similar orthography but different phonology (e.g. pint-mint) or similar phonology but different orthography (e.g. jazz-has). Easier non-conflicting trials had similar orthography and phonology (e.g. dime-lime) or different orthography and phonology (e.g. staff-gain). The modulatory effect from left fusiform gyrus to left inferior parietal lobule was stronger in controls than in children with reading difficulties only for conflicting trials. Modulatory effects from left fusiform gyrus and left inferior parietal lobule to left inferior frontal gyrus were stronger for conflicting trials than for non-conflicting trials only in control children but not in children with reading difficulties. Modulatory effects from left inferior frontal gyrus to inferior parietal lobule, from medial frontal gyrus to left inferior parietal lobule, and from left inferior parietal lobule to medial frontal gyrus were positively correlated with reading skill only in control children. These findings suggest that children with reading difficulties have deficits in integrating orthography and phonology utilizing left inferior parietal lobule, and in engaging phonological rehearsal/segmentation utilizing left inferior frontal gyrus possibly through the indirect pathway connecting posterior to anterior language processing regions, especially when the orthographic and phonological information is conflicting.