Semantic transparency effects during compound word recognition provide critical insight into the organization of semantic knowledge and the nature of semantic processing. The past 25 years of psycholinguistic research on compound semantic transparency has produced discrepant effects, leaving the existence and nature of its influence unresolved. In the present study, we examined the influence of semantic transparency and individual reading experience on eye-movement behavior during sentence reading. Eye-movement data were collected from 138 non-college-bound 16- to 26-year-old speakers of English in a sentence-reading task representing a total of 455 different compound words. Measures of individual differences in reading experience were collected from the same participants and consisted of standardized assessments of exposure to printed materials, vocabulary size, and word recognition skill. Statistical analyses revealed facilitatory effects of both Modifier-Compound and Head-Compound transparency throughout the eye-movement record. Moreover, the study reports interactions between Head-Compound transparency and measures of reading experience. Readers with a small amount exposure to printed materials and a limited vocabulary size exhibited slower processing in late eye-movement measures when reading highly transparent compounds relative to opaque compounds. The opposite effect was observed for readers with a relatively large amount of exposure to printed materials and a relatively larger vocabulary size, such that highly transparent compounds facilitated lexical processing. To account for the results, the authors posit a trade-off between 2 cognitive mechanisms, which is modulated by individual reading experience; that is, the benefit of semantic coactivation of closely related concepts, and the cost of discriminating between those concepts. (PsycINFO Database Record This work was supported by the Ontario Trillium Award and a Graduate fellowship awarded by the Lewis & Ruth Sherman Centre for Digital Scholarship (McMaster University) to Daniel Schmidtke. Julie A. Van Dyke’s contribution was supported by the following NIH grants to Haskins Laboratories: R01 HD-073288 (Julie A. Van Dyke, PI), and P01 HD-01994 (Jay G. Rueckl, PI). Victor Kuperman’s contribution was partially supported by the Canadian Social Sciences and Humanities Research Council Insight Development (430-2012-0488), and the Canadian Natural Sciences and Engineering Research Council (402395-2012), and the Early Researcher Award from the Ontario Research Fund. The authors are grateful to Morgan Bontrager for assistance with data collection and Kazunaga Matsuki for his contributions to statistical analyses. For technical support, we thank the Sherman Centre for Digital Scholarship at McMaster University. Thanks are also due to the attendees of the Twenty-First Annual Meeting of the Society for the Scientific Study of Reading, Santa Fe, New Mexico, where this work was presented in July 2014; the attendees of the Eighteenth Annual European Conference on Eye Movements, Vienna, Austria, where this work was presented in August 2015; attendees of the Third American International Morphology Meeting, which was held in Amherst, Massachusetts, in October 2015; and also to members of the Quantitative Linguistics research unit at the University of Tübingen, Tübingen, Germany, where this work was presented in April 2016. We also wish to thank Harald Baayen, Thomas Spalding and Christina Gagné for commenting upon earlier versions of this article. The content is solely the responsibility of the authors and does not necessarily represent the official views of the U.S. National Institutes of Health or the Canadian Government.