To examine how young children learn to read new words, we asked preschoolers (N = 115, mean age 4 years, 8 months) to learn and remember novel spellings that made sense based on letter names (e.g. TZ for "tease") and spellings that were visually distinctive but phonetically inappropriate. Children who were more knowledgeable about letter names tended to perform better in the name condition than the visual condition. In contrast, prereaders with little knowledge of letter names performed better in the visual condition than the name condition. Increasing the difficulty of the task led to more advanced patterns of performance, in that a benefit for the name condition over the visual condition was more likely to emerge when children learned five items at a time than when they learned four. This result, which is the opposite of that typically found in the literature on strategy development, appears to arise because the demands of learning a larger set of words encourage an analytic, letter-based approach.