This study aimed to investigate the moderating effect of morphological awareness on the relationship between word detection skills and reading comprehension in Chinese children with and without dyslexia. The study included 116 Chinese children in third to sixth grades, with 60 children diagnosed with dyslexia and 56 matching typically developing children. ANCOVAs revealed significant group differences in word detection skills and morphological awareness, with children with dyslexia performing significantly worse than their typically developing peers. Partial correlation analyses showed significant correlations between reading comprehension and morphological awareness in typically developing children and between reading comprehension and both word detection skills and morphological awareness in children with dyslexia. Moderation analyses revealed that morphological awareness significantly moderated the relationship between word detection skills and reading comprehension in both groups. For typically developing children, the relationship was significant at higher levels of morphological awareness, while for children with dyslexia, the relationship was significant at lower levels of morphological awareness. The findings suggest that word detection skills may serve as a compensatory mechanism for children with dyslexia when morphological awareness is at lower levels, highlighting the need for targeted interventions and individualised approaches to reading instruction.