Neuroimaging studies have revealed that the functional organization of reading differs between developmentally dyslexic and non-impaired individuals. However, it is not clear how early in the reading process the differences between fluent and dyslexic readers start to emerge. We studied cortical activity of ten dyslexic adults using magnetoencephalography (MEG), as they silently read words or viewed symbol-strings which were clearly visible or degraded with Gaussian noise. This method has previously been used to dissociate between analysis of local features and pre-lexical word processing in fluent adult readers. Signals peaking around 100 ms after stimulus onset and originating in the postero-medial extrastriate cortex were associated with increasing local luminance contrast in the noise patches. These early visual responses were similar in dyslexic and non-impaired readers. In contrast, the letter-string-specific responses peaking around 150 ms predominantly in the left inferior occipito-temporal cortex in fluent readers were undetectable in dyslexic readers. Thus, while the early visual processing seems intact in dyslexic adults, the pattern of cortical activation starts to differ from that of fluent readers at the point where letter-string-specific signals first emerge during reading.