This study investigates the ERP components associated with the processing of words that are critical to generating and rejecting deductive conditional Modus Ponens arguments ("If P then Q; P//"Therefore, "Q"). The generation of a logical inference is investigated by placing a verb in the minor premise that matches the one used in the antecedent of the conditional premise so that the inference can be carried out ("If John is sleeping then he is snoring; John is sleeping"). Rejections are examined by placing verbs that are associates of the verb that would make the conclusion valid (Conclusion "therefore John is dreaming" in the example above). The inference generation phase was characterized by two ERP components, namely the P3b and the PSW. Rejections were associated with an N2 and a late positive component. The implications of these results regarding the processing of words in an inferential context are discussed. (Contains 5 figures.)