Concept of word—the awareness of how words differ from nonwords or other linguistic properties—is important to learning to read Chinese because words in Chinese texts are not separated by space, and most characters can be productively compounded with other characters to form new words. The current study examined the effects of reader, word, and character attributes on Chinese children’s concept of word in text. A total of 164 fifth-grade Chinese children participated in this study. Concept of word was measured by children’s lexical decisions about words and nonwords embedded in strings of characters. Cross-classified multilevel logistic models showed that reader attributes, including reading comprehension, vocabulary knowledge, and morphological awareness, interacted with certain word or character attributes in predicting children’s lexical decisions about words or nonwords. This study sheds light on the complex relationships between reader, word, and character attributes in the formation of concept of word in Chinese.