It is widely argued that people with autism have difficulty processing ambiguous linguistic information in context. To investigate this claim, we recorded the eye-movements of 24 adolescents with autism spectrum disorder and 24 language-matched peers as they monitored spoken sentences for words corresponding to objects on a computer display. Following a target word, participants looked more at a competitor object sharing the same onset than at phonologically unrelated objects. This effect was, however, mediated by the sentence context such that participants looked less at the phonological competitor if it was semantically incongruous with the preceding verb. Contrary to predictions, the two groups evidenced similar effects of context on eye-movements. Instead, across both groups, the effect of sentence context was reduced in individuals with relatively poor language skills. Implications for the weak central coherence account of autism are discussed. (Contains 5 figures and 1 table.)