The mind flows in a “stream of consciousness,” which often neglects immediate sensory input in favor of focusing on intrinsic, self-generated thoughts or images. Although considerable research has documented the disruptive influences of task-unrelated thought for perceptual processing and task performance, the brain dynamics associated with these phenomena are not well understood. Here we investigate the possibility, suggested by several convergent lines of research, that task-unrelated thought is associated with a reduction in the trial-to-trial phase consistency of the oscillatory neural signal in response to perceptual input. Using an experience sampling paradigm coupled with continuous high-density electroencephalography, we observed that task-unrelated thought was associated with a reduction of the P1 ERP, replicating prior observations that mind-wandering is accompanied by a reduction of the brain-evoked response to sensory input. Time–frequency analysis of the oscillatory neural response revealed a decrease in theta-band cortical phase-locking, which peaked over parietal scalp regions. Furthermore, we observed that task-unrelated thought impacted the oscillatory mode of the brain during the initiation of a task-relevant action, such that more cortical processing was required to meet task demands. Together, these findings document that the attenuation of perceptual processing that occurs during task-unrelated thought is associated with a reduction in the temporal fidelity with which the brain responds to a stimulus and suggest that increased neural processing may be required to recouple attention to a task. More generally, these data provide novel confirmatory evidence for the mechanisms through which attentional states facilitate the neural processing of sensory input.