Prediction is held to be a fundamental process underpinning perception, action, and cognition. To examine the time course of prediction error signaling, we recorded intracranial EEG activity from nine presurgical epileptic patients while they listened to melodies whose information theoretical predictability had been characterized using a computational model. We examined oscillatory activity in the superior temporal gyrus (STG), the middle temporal gyrus (MTG), and the pars orbitalis of the inferior frontal gyrus, lateral cortical areas previously implicated in auditory predictive processing. We also examined activity in anterior cingulate gyrus (ACG), insula, and amygdala to determine whether signatures of prediction error signaling may also be observable in these subcortical areas. Our results demonstrate that the information content (a measure of unexpectedness) of musical notes modulates the amplitude of low-frequency oscillatory activity (theta to beta power) in bilateral STG and right MTG from within 100 and 200 msec of note onset, respectively. Our results also show this cortical activity to be accompanied by low-frequency oscillatory modulation in ACG and insula—areas previously associated with mediating physiological arousal. Finally, we showed that modulation of low-frequency activity is followed by that of high-frequency (gamma) power from approximately 200 msec in the STG, between 300 and 400 msec in the left insula, and between 400 and 500 msec in the ACG. We discuss these results with respect to models of neural processing that emphasize gamma activity as an index of prediction error signaling and highlight the usefulness of musical stimuli in revealing the wide-reaching neural consequences of predictive processing.