In functional neuroimaging studies, individuals with dyslexia frequently exhibit both hypoactivation, often in the left parietotemporal cortex, and hyperactivation, often in the left inferior frontal cortex, but there has been no evidence to suggest how to interpret the differential relations of hypoactivation and hyperactivation to dyslexia. To address this question, we measured brain activation by functional MRI during visual word rhyme judgment compared with visual cross-hair fixation rest, and we measured gray matter morphology by voxel-based morphometry in dyslexic adolescents in comparison with (i) an age-matched group, and (ii) a reading-matched group younger than the dyslexic group but equal to the dyslexic group in reading performance. Relative to the age-matched group (n = 19; mean 14.4 years), the dyslexic group (n = 19; mean 14.4 years) exhibited hypoactivation in left parietal and bilateral fusiform cortices and hyperactivation in left inferior and middle frontal gyri, caudate, and thalamus. Relative to the reading-matched group (n = 12; mean 9.8 years), the dyslexic group (n = 12; mean 14.5 years) also exhibited hypoactivation in left parietal and fusiform regions but equal activation in all four areas that had exhibited hyperactivation relative to age-matched controls as well. In regions that exhibited atypical activation in the dyslexic group, only the left parietal region exhibited reduced gray matter volume relative to both control groups. Thus, areas of hyperactivation in dyslexia reflected processes related to the level of current reading ability independent of dyslexia. In contrast, areas of hypoactivation in dyslexia reflected functional atypicalities related to dyslexia itself, independent of current reading ability, and related to atypical brain morphology in dyslexia.