Natural consonant-vowel syllables are reliably classified by most listeners as voiced or voiceless. However, our previous research [Liederman, J., Frye, R., Fisher, J.M., Greenwood, K., Alexander, R., 2005. A temporally dynamic context effect that disrupts voice onset time discrimination of rapidly successive stimuli. Psychon Bull Rev. 12, 380-386] suggests that among synthetic stimuli varying systematically in voice onset time (VOT), syllables that are classified reliably as voiceless are nonetheless perceived differently within and between listeners. This perceptual ambiguity was measured by variation in the accuracy of matching two identical stimuli presented in rapid succession. In the current experiment, we used magnetoencephalography (MEG) to examine the differential contribution of objective (i.e., VOT) and subjective (i.e., perceptual ambiguity) acoustic features on speech processing. Distributed source models estimated cortical activation within two regions of interest in the superior temporal gyrus (STG) and one in the inferior frontal gyrus. These regions were differentially modulated by VOT and perceptual ambiguity. Ambiguity strongly influenced lateralization of activation; however, the influence on lateralization was different in the anterior and middle/posterior portions of the STG. The influence of ambiguity on the relative amplitude of activity in the right and left anterior STG activity depended on VOT, whereas that of middle/posterior portions of the STG did not. These data support the idea that early cortical responses are bilaterally distributed whereas late processes are lateralized to the dominant hemisphere and support a "how/what" dual-stream auditory model. This study helps to clarify the role of the anterior STG, especially in the right hemisphere, in syllable perception. Moreover, our results demonstrate that both objective phonological and subjective perceptual characteristics of syllables independently modulate spatiotemporal patterns of cortical activation.