In this article, we argue that loanword adaptation is overwhelmingly phonological and that phonetic approximation plays a limited role in the sound changes that loanwords undergo. Explicit criteria are used to compare the predictions of the phonetic approximation and phonological stances against 12 large corpora of recent English and French loanwords in several different languages. We show that category proximity is overwhelmingly preferred over perceptual proximity and that typical L2 perception/interpretation errors are not reflected in the adaptations of the loanwords of this database. Borrowers accurately identify L2 sound categories, operating on the mental representation of an L2 sound, not directly on its surface phonetic form.