Masked transposed-letter (TL) priming effects have been used to index letter position processing over the course of reading development. Whereas some studies have reported an increase in TL priming over development, others have reported a decrease. These findings have led to the development of 2 somewhat contradictory accounts of letter position development: the lexical tuning hypothesis and the multiple-route model. One factor that may be contributing to these discrepancies is the use of baseline primes that substitute letters in the target word, which may confound the effect of changes in letter position processing over development with those of letter identity. The present study included an identity prime (e.g., listen—LISTEN), in addition to the standard two-substituted-letter (2SL; e.g., lidfen—LISTEN) and all-letter-different (ALD; e.g., rodfup—LISTEN) baselines, to remove the potential confound between letter position and letter identity information in determining the effect of the TL prime. Priming effects were measured in a lexical decision task administered to children aged 7–12 and a group of university students. Using inverse transformed response times, targets preceded by a TL prime were responded to significantly faster than those preceded by 2SL and ALD primes, and priming remained stable across development. In contrast, targets preceded by a TL prime were responded to significantly slower than those preceded by an ID prime, and this reaction-time cost increased significantly over development, with adults showing the largest cost. These findings are consistent with a lexical tuning account of letter position development, and are inconsistent with the multiple-route model.