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Abstract: The aim of the present study was to examine the pattern of phonological activation during Chinese sentence reading. Terminal words in high cloze sentences were manipulated across six conditions defined by word frequency and ending types. The P200 was smaller for the congruent targets than for the unrelated control targets, while there were no differences between the homophonic and unrelated control targets. No frequency effect on the P200 was observed. More importantly, a reduced N400 to the homophonic words was observed independent of word frequency. Source analysis by low resolution electromagnetic tomography (LORETA) revealed that the highly activated areas for the P200 were located at bilateral superior frontal (BA 6) and occipital (BA 17, 18 and 19) areas, while the N400 was located at left medial frontal (BA 6) area. These findings suggest that phonology is activated automatically for both high- and low-frequency words during Chinese sentence reading, even when the task is not focused on pronunciation. [Copyright &y& Elsevier]