Three experiments were undertaken to examine second and fifth grade Telugu-speaking children's awareness of phonological and orthographic properties of familiar Telugu words. Experiment 1 focused on the strategies the children used in completing word fragments. Experiment 2 examined the children's ability to judge and generate rhyming words, and Experiment 3 examined the children's strategies in comprehending meanings of orthographically similar rhyming vs. non-rhyming word pairs in a sentence completion task. The results demonstrated that specific features of semi-syllabic alphabets such as Telugu interact with phonological knowledge during the processing of meaningful words such that children with more formal instruction in reading are able to access phonological information better than younger children with less well developed orthographic knowledge. Some pedagogic implications of the results are discussed.