To investigate the interaction in speech perception between lexical knowledge (in particular, whether a stimulus token makes a word or nonword) and phonetic categorization, sets of [bVC]-[dVC] place-of-articulation continua were constructed so that the endpoint tokens represented word-word, word-nonword, nonword-word, and nonword-nonword combinations. Experiment 1 demonstrated that ambiguous tokens were perceived in favor of the word token and supported the contention that lexical knowledge can affect the process of phonetic categorization. Experiment 2 utilized a reaction time procedure with the same stimuli and demonstrated that the effect of lexical status on phonetic categorization increased with response latency, suggesting that the lexical effect represents a perceptual process that is separate from and follows phonetic categorization. Experiment 3 utilized a different set of [b-d] continua to separate the effects of final consonant contrast and lexical status that were confounded in Experiments 1 and 2. Results demonstrated that both lexical status and contextual contrast separately affected the identification of the initial stop. Data from these three experiments support a perceptual model wherein phonetic categorization can operate separately from higher levels of analysis.