Q. How do you know when to use On-reading and Kun-reading?
A. Unfortunately there is no simple way to explain when to use On-reading or Kun-reading. You need to memorize the pronunciation on an individual basis, one word at a time. However, here are some facts that are worth remembering.
On-reading is usually used when the kanji is a part of a compound (two or more kanji characters are placed side by site). Kun-reading is used when the kanji is used on its own, either as a complete noun or as adjective stems and verb stems. This is not a hard rule, but at least you can make a better guess.
Let's take a look at the kanji character for "水 (water)". The On-reading for the character is "sui" and the Kun-reading is "mizu." "水 (mizu)" is a word in its own right, meaning "water". The kanji compound "水曜日(Wednesday)" is read as "suiyoubi." Here are other examples.
|音||音楽 - ongaku
|音 - oto
|星||星座 - seiza
|星 - hoshi
|新||新聞 - shinbun
|食||食欲 - shokuyoku
|食べる - ta(beru)
"Kanji Land" lessons include both On-reading and Kun-reading and useful kanji compounds.
Vol. 43: What is On-reading and Kun-reading?