In contrast to word-level skills, the neural basis of sentence comprehension in children with reading difficulties is not well understood. Using magnetic source imaging, we investigated the spatiotemporal dynamics of regional activity associated with silent passage reading in non-impaired and students with reading difficulties. The latter exhibited underactivation of the temporo-parietal and visual cortices, bilaterally, as well as of the left posterior cingulate region. Late activity in left temporo-parietal and ventral occipito-temporal regions was found to be a significant predictor of individual reading ability in non-impaired, but not in students with reading difficulties. These findings support the notion that reduced temporo-parietal activation during word reading in context, is a hallmark of the functional deficit in reading disability.