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EVENT-RELATED potentials, recorded through a 128-electrode net, were used to study phonemic processing in the human auditory system. Within a stream of identical syllables, acoustic deviants were introduced that either crossed a phonetic boundary or remained within the same category. Two phonetic boundaries were explored, one present and the other absent in the subjects' native language. A large mismatch negativity was induced by native phonetic deviants, but not by non-native or within-category deviants. We suggest that a language-specific phonemic code has a separate neural representation in sensory memory and can serve as the basis for auditory mismatch detection. The subjects' inability to discriminate non-native phonetic contrasts does not seem related to a late attentional filter, but rather to a genuine loss of auditory discrimination abilities.