The role of phonological coding for character identification was examined with the benefit of processing parafoveal characters in eye fixations while reading Chinese sentences. In Experiment 1, the orthogonal manipulation of phonological and orthographic similarity can separate two types of phonological benefits for homophonic previews, according to whether these previews share the same phonetic radical with the targets or not. The significant phonological benefits indicate that phonological coding is activated early when the character is in the parafovea. Experiment 2 manipulated the character's consistency value and found that the phonological preview benefits are reliable only when the targets are high consistency characters. The results of two experiments suggest that phonological computation is rapid and early at both character and radical levels for Chinese character identification.