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The purpose of this study was to test the hypothesis that two lexical characteristics – neighborhood density and word frequency – interact to influence performance on phoneme awareness tasks. Phoneme awareness was examined in a large, longitudinal dataset of 2nd and 4th grade children. Using linear logistic test model, the relation between words’ neighborhood density, word frequency, and phoneme awareness performance was examined across grades while co-varying type and place of deletion. A predicted interaction was revealed: words from dense neighborhoods or those with high frequency were more likely to yield correct phoneme awareness responses across grades. Findings support an expansion of the lexical restructuring model to include interactions between neighborhood density and word frequency to account for phoneme awareness. The article describes the lexical restructuring model, defines neighborhood density and word frequency, identifies how these variables interact to impact phoneme awareness performance, and suggests ways in which future clinical practice may be affected by the study’s findings.