We investigated the impact of flanking stimuli that are orthographic neighbors of central target words in the reading version of the flankers task. Experiment 1 provided a replication of the finding that flanking words that are orthographic neighbors of central target words (e.g., BLUE BLUR BLUE) facilitate lexical decisions relative to unrelated word flankers (e.g., STEP BLUR STEP). Experiment 2 tested the hypothesis that this facilitatory effect might be due to the task that was used in Experiment 1 and in prior research–the lexical decision task. In Experiment 2 the task was perceptual identification, and here we observed that orthographic neighbor flankers interfered with target word identification. Experiment 2 also included a bigram flanker condition (e.g., BL BLUR UE), and here the related bigram flankers facilitated target word identification. We conclude that when the task requires identification of a specific word, effects of lexical competition emerge over and above the facilitatory effects driven by the sublexical spatial pooling of orthographic information across target and flankers, and that the inhibitory influence of lexical competition has an even stronger impact when flankers are whole words.