<p>This study investigated how the division of labor between phonological and semantic processing manifests in Chinese second language (L2) learners across proficiency levels. Thirty-nine native speakers and 58 Chinese L2 learners (31 advanced, 27 intermediate) completed two character-naming tests manipulating the characters’ familiarity and regularity (lexical level) and consistency and transparency (sub-lexical level). We also assessed Chinese language components and literacy. Native speakers showed a division-of-labor pattern characteristic of skilled readers, particularly at the lexical level. Among L2 learners, the division-of-labor patterns varied as a function of proficiency. Individual differences revealed that sensitivity to orthography–phonology (O–P) and orthography–semantics (O–S) associations predicted L2 literacy. Structural equation modeling revealed that the familiarity effect was associated with both phonological awareness and Chinese L2 literacy, and phonological awareness was also associated with L2 literacy outcomes. These findings suggest that efficient integration of phonological and semantic cues at both lexical and sub‑lexical levels is important for literacy acquisition in Chinese L2 learners.</p>