The nature of morphological decomposition in visual word recognition remains unclear regarding morphemically complex words such as prefixed words. To investigate the decomposition process, the current study examined the extent to which effects involving transposed letters are modulated when the transposed letters cross a morpheme boundary. Previous studies using masked priming have demonstrated that transposed letter effects (i.e. superior priming when the prime contains transposed letters than when it contains replacement letters) disappear or markedly decrease when the transposition occurs across a morpheme boundary. The current experiments further investigated transposed letter effects in prefixed words using both parafoveal previews in natural reading and masked priming. There were significant differences between both the correct and transposed letter conditions and the replacement letter condition, but no interaction between the preview effects and type of target word in both the natural reading and masked priming tasks. Thus, unattenuated transposed letter effects can be elicited when the transposition occurs across the morpheme boundary between prefix and root morpheme, indicating that morphemic decomposition is not involved in the early processes of word recognition reflected in parafoveal previews and masked primes.