In contrast to word-level skills, the neural basis of sentence comprehension in children with reading difficulties is not well understood. Using magnetic source imaging, we investigated the spatiotemporal dynamics of regional activity associated with silent passage reading in nonimpaired and students with reading difficulties. The latter exhibited underactivation of the temporoparietal and visual cortices, bilaterally, and of the left posterior cingulate region. Late activity in left temporoparietal and ventral occipitotemporal regions was found to be a significant predictor of individual reading ability in nonimpaired, but not in students with reading difficulties. These findings support the notion that reduced temporoparietal activation during word reading in context, is a hallmark of the functional deficit in reading disability.