This study investigated how visual processing of simple and compound words in Thai can be modulated by the experimental tasks. A sentence reading eye-tracking experiment (Experiment 1) and a lexical decision experiment (Experiment 2) were conducted on Thai bisyllabic compounds and simple nouns. Experiment 1 had two interword spacing conditions and examined how adding interword spacing to Thai sentences (normally unspaced in writing) modulated lexical processing. Experiment 1’s results showed that compounds incurred longer fixation durations than simple words, whereas interword spacing facilitated word recognition for both word types. Experiment 2 revealed a different result. Word recognition was faster for compounds than simple words. We assumed the disparity stemmed from different task demands. Sentence reading requires integration of semantics and syntactic processing, and compounds would require additional semantic integration processing. By contrast, lexical decision focuses on isolated word recognition and the word’s syntactic and semantic features are not activated.