Evidence of systematic misreading has been taken to argue that language processing is noisy, and that readers take noise into consideration and therefore sometimes interpret sentences non-literally (rational inference over a noisy channel). The present study investigates one specific misreading phenomenon: failure to notice word transpositions in a sentence. While this phenomenon can be explained by rational inference, it also has been argued to arise due to parallel lexical processing. The study explored these two accounts. Visual, lexical, and syntactic properties of the two transposed words were manipulated in three experiments. Failure to notice the transposition was more likely when both words were short, and when readers' eyes skipped, rather than directly fixated, one of the two words. Failure to notice the transposition also occurred when one word was long. The position of ungrammaticality elicited by transposition (the first vs. second transposed word) influenced tendency to miss the error; the direction of the effect, however, depended on word classes of the transposed words. Failure of detection was not more likely when the second transposed word was easier to recognize than the first transposed word. Finally, readers’ eye movements on the transposed words revealed no disruption in those trials when they ultimately accepted the sentence to be grammatical. We consider the findings to be only partially supportive of parallel lexical processing and instead propose that word recognition is serial, but integration is not perfectly incremental, and that rational inference may take place before an ungrammatical representation is constructed.