The joint effects of stimulus quality and semantic context in visual word recognition were examined with event-related potential (ERP) recordings. In one-character Chinese word recognition, we manipulated stimulus quality at two degradation levels (highly vs. slightly degraded) and semantic context at two priming levels (semantically related vs. unrelated). In a prime–target–probe trial flow, ERPs were recorded to the target character which was presented in either high or slight degradation and which was preceded by either a semantically related or unrelated prime character. The target character was then followed by a probe character which was either identical to or different from the target character. Subjects were instructed to make target–probe matching judgments. The ERP results demonstrated a degradation by priming interaction, with larger N400 semantic priming effects for slightly degraded targets. Moreover, the degradation effects were observed on the P200, N250, and N400. These findings provided evidence for the cascaded model of visual word recognition such that the visual processing cascaded into the semantic stage and thus interacted on the N400 amplitude. The results were compared to an earlier study with a null ERP degradation by priming interaction. The ramifications of these results for models of visual word recognition are discussed.