Developmental differences in phonological and orthographic processing of Chinese spoken words were examined in 9-year-olds, 11-year-olds and adults using functional magnetic resonance imaging (fMRI). Rhyming and spelling judgments were made to two-character words presented sequentially in the auditory modality. Developmental comparisons between adults and both groups of children combined showed that age-related changes in activation in visuo-orthographic regions depended on a task. There were developmental increases in the left inferior temporal gyrus and the right inferior occipital gyrus in the spelling task, suggesting more extensive visuo-orthographic processing in a task that required access to these representations. Conversely, there were developmental decreases in activation in the left fusiform gyrus and left middle occipital gyrus in the rhyming task, suggesting that the development of reading is marked by reduced involvement of orthography in a spoken language task that does not require access to these orthographic representations. Developmental decreases may arise from the existence of extensive homophony (auditory words that have multiple spellings) in Chinese. In addition, we found that 11-year-olds and adults showed similar activation in the left superior temporal gyrus across tasks, with both groups showing greater activation than 9-year-olds. This pattern suggests early development of perceptual representations of phonology. In contrast, 11-year-olds and 9-year-olds showed similar activation in the left inferior frontal gyrus across tasks, with both groups showing weaker activation than adults. This pattern suggests late development of controlled retrieval and selection of lexical representations. Altogether, this study suggests differential effects of character acquisition on development of components of the language network in Chinese as compared to previous reports on alphabetic languages.