Using both visual-visual and auditory-visual priming lexical decision tasks, this study investigated phonological processing in reading logographic Chinese. Compound words sharing segmental templates but differing in lexical tones were used as primes and targets while their relative frequency was manipulated. It was found that tone neighbours did not prime each other significantly and the SOA of 100 msec in visual-visual priming. When the SOA was increased to 357 msec, or when primes were presented auditorily, the processing of target words was significantly delayed by their tone neighbours. Larger inhibitory effects were observed for low frequency targets with high frequency primes. It was argued that although phonological information is automatically activated and this activation affects access to semantics in reading Chinese,phonological mediation is not the only or the main ~urce of constraints on semantic activation.