A perceptual learning experiment provides evidence that the mental lexicon cannot consist solely of detailed acoustic traces of recognition episodes. In a training lexical decision phase, listeners heard an ambiguous [f-s] fricative sound, replacing either [f] or [s] in words. In a test phase, listeners then made lexical decisions to visual targets following auditory primes. Critical materials were minimal pairs that could be a word with either [f] or [s] (cf. English knife-nice), none of which had been heard in training. Listeners interpreted the minimal pair words differently in the second phase according to the training received in the first phase. Therefore, lexically mediated retuning of phoneme perception not only influences categorical decisions about fricatives (Norris, McQueen, & Cutler, 2003), but also benefits recognition of words outside the training set. The observed generalization across words suggests that this retuning occurs prelexically. Therefore, lexical processing involves sublexical phonological abstraction, not only accumulation of acoustic episodes.