The present study investigates bilinguals' capacity to rapidly establish memory traces for novel word forms in a second language (L2), as a function of L2 linguistic proficiency. A group of Chinese-English bilinguals with various English proficiency levels were presented with a reading-aloud task, consisting of 16 pseudowords and 16 English words repeatedly presented across six training exposures. Behavioral and neurophysiological data were collected, and modulations in the word-length effect across repetitions were measured as an index of transition from sublexical to lexical involvement. Results revealed that higher L2 proficiency was associated with decreased word-length effect on novel words, reflected in both naming latencies and early N1 and P200 brain responses. In contrast, lower proficiency learners appeared to engage in effortful letter-to-sound decoding processes, with higher attentional allocation to the letter sequence and greater use of sublexical processing across exposures. Our findings highlight the need to tackle specific grapheme-to-phoneme skills for efficient learning of L2, particularly in populations where the L1 is nonalphabetic.