An important question in literacy education is whether reading instruction should focus on whole words or subword constituents. We tested whether this question captures something general across writing systems by examining the functionalities of words and characters in learning Chinese. We introduce a character-word dual-focus instructional approach based on the Character-Word Dual Function model and test its predictions with American undergraduate students enrolled in a beginner-level Chinese course. One group learned new words through dual-focus instruction: characters for pronunciation and words for meaning. A second group followed typical word-focus instruction prevalent in classrooms, learning word-level pronunciation and meaning. Results indicated that while both approaches produced comparable levels of word pronunciation and meaning learning, the dual-focus instruction significantly enhanced character pronunciation and transfer to new word learning. The advantages of dual-focus instruction highlight the importance of learning the subword components through acquiring the systematic structure of the writing system in learning to read.