Previous research has demonstrated that the masking effects of flankers about a target in the peripheral retina are not isotropic. Rather, regions of lateral interaction are ellipsoid in shape with the major axis oriented radially along a meridian through the fovea. This finding leads to the counterintuitive prediction that horizontal text positioned to the right of fixation might be read more slowly than similarly positioned text oriented diagonally or vertically. Similarly, vertically oriented text above fixation might be read more slowly than horizontally or diagonally oriented text above fixation. We investigated the effect of text orientation and inter-character spacing on word identification in the retinal periphery. Text was presented by rapid serial visual presentation. Words were centered 3 degrees from fixation along four visual field meridians (VM) (right horizontal, upper-right diagonal, vertical, and upper-left diagonal). Regardless of VM identification, performance was best for horizontal text, declining slightly for orientations between +60 degrees and -60 degrees and declining more quickly for acute orientations. A weak effect of VM was observed for text with normal inter-character spacing. Performance was best for text centered along the horizontal meridian and declined slightly along the other VM. Finally, identification rates increased by approximately 33 words min(-1) with the addition of one character space between adjacent letters. The word-recognition processes are very tolerant of text orientation, exhibiting a modest decline for orientations within +/- 60 of horizontal regardless of VM.