Memory for verbal material improves when words form familiar chunks. But how does the improvement due to chunking come about? Two possible explanations are that the input might be actively recoded into chunks, each of which takes up less memory capacity than items not forming part of a chunk (a form of data compression), or that chunking is based on redintegration. If chunking is achieved by redintegration, representations of chunks exist only in long-term memory (LTM) and help to reconstructing degraded traces in short-term memory (STM). In 6 experiments using 2-alternative forced choice recognition and immediate serial recall we find that when chunks are small (2 words) they display a pattern suggestive of redintegration, whereas larger chunks (3 words), show a pattern consistent with data compression. This concurs with previous data showing that there is a cost involved in recoding material into chunks in STM. With smaller chunks this cost seems to outweigh the benefits of recoding words into chunks. (PsycInfo Database Record (c) 2020 APA, all rights reserved).