The current study examined the neural systems underlying lexically conditioned phonetic variation in spoken word production. Participants were asked to read aloud singly presented words, which either had a voiced minimal pair (MP) neighbor (e.g., cape) or lacked a minimal pair (NMP) neighbor (e.g., cake). The voiced neighbor never appeared in the stimulus set. Behavioral results showed longer voice-onset time for MP target words, replicating earlier behavioral results [Baese-Berk, M., & Goldrick, M. Mechanisms of interaction in speech production. Language and Cognitive Processes, 24, 527–554, 2009]. fMRI results revealed reduced activation for MP words compared to NMP words in a network including left posterior superior temporal gyrus, the supramarginal gyrus, inferior frontal gyrus, and precentral gyrus. These findings support cascade models of spoken word production and show that neural activation at the lexical level modulates activation in those brain regions involved in lexical selection, phonological planning, and, ultimately, motor plans for production. The facilitatory effects for words with MP neighbors suggest that competition effects reflect the overlap inherent in the phonological representation of the target word and its MP neighbor.