To investigate phonological effects in visual word recognition, a visual lexical decision task was used in which the critical stimuli were two types of highly familiar Hebrew acronyms: 'phonological' acronyms that are conventionally pronounced as single words via letter‐to‐sound translation (ד"ש (d"ʃ) = /daʃ/), and 'lexical' acronyms that are conventionally pronounced according to their full multiword name (ת"א(t"ʔ) = /tel/ /aviv/). Thus, in the case of 'phonological' acronyms, phonological recoding may contribute to the recognition process, while in the case of 'lexical' acronyms, it may interfere ((ת"אt"ʔ) ≠ taʔ/). If familiar letter strings are accessed mainly orthographically, as assumed by dual route models, then no difference is expected between these two types of acronyms. Alternatively, if phonological recoding influences word recognition, then 'phonological' acronyms should be easier to recognise. Consistent with this latter interactive‐connectionist view, responses were faster and more accurate in the 'phonological' than in the 'lexical' condition. Highlights: What is already known about this topicThe most convincing evidence for early phonological effects in visual word recognition comes from studies using the masked priming paradigm with nonwords as primes.However, evidence for mandatory phonological activations during the processing of unfamiliar letter strings do not necessarily entail that the recognition of familiar words always involves phonological activations.Therefore, the aim of the present study was to investigate the role phonology plays in the recognition of familiar letter strings. What this paper addsIn Hebrew, letters represent mostly consonants and readers supply the vowels by themselves. Thus, unlike English, most Hebrew acronyms are treated as regular words ('phonological' acronyms).Nevertheless, although all letter strings in Hebrew can be pronounced as is, via spelling‐to‐sound translation, some acronyms are pronounced according to their full multiword name ('lexical' acronyms).Using a visual lexical decision task, we found that 'phonological' acronyms that can be recognised both orthographically and phonologically were recognised faster and more accurate than equally familiar 'lexical' acronyms that can only be recognised orthographically. Implications for theory, policy or practiceConsistent with interactive‐connectionist models, we show that phonological recoding is not only automatic, but also fast enough to influence the recognition process.Importantly, this prominent role of phonology is shown even in a task that emphasises orthographic rather than phonological processes, and even when the letter string is highly familiar. [ABSTRACT FROM AUTHOR]