This study explored the neural systems underlying the perception of phonetic category structure by investigating the perception of a voice onset time (VOT) continuum in a phonetic categorization task. Stimuli consisted of five synthetic speech stimuli which ranged in VOT from 0 msec ([da]) to 40 msec ([ta]). Results from 12 subjects showed that the neural system is sensitive to VOT differences of 10 msec and that details of phonetic category structure are retained throughout the phonetic processing stream. Both the left inferior frontal gyrus (IFG) and cingulate showed graded activation as a function of category membership with increasing activation as stimuli approached the phonetic category boundary. These results are consistent with the view that the left IFG is involved in phonetic decision processes, with the extent of activation influenced by increased resources devoted to resolving phonetic category membership and/or selecting between competing phonetic categories. Activation patterns in the cingulate suggest that it is sensitive to stimulus difficulty and resolving response conflict. In contrast, activation in the posterior left middle temporal gyrus and the left angular gyrus showed modulation of activation only to the “best fit” of the phonetic category, suggesting that these areas are involved in mapping sound structure to its phonetic representation. The superior temporal gyrus (STG) bilaterally showed weaker sensitivity to the differences in phonetic category structure, providing further evidence that the STG is involved in the early analysis of the sensory properties of speech.