Eye movements were monitored as participants followed spoken instructions to manipulate one of four objects pictured on a computer screen. Target words occurred in utterance-medial (e.g., "Put the cap next to the square") or utterance-final position (e.g., "Now click on the cap"). Displays consisted of the target picture (e.g., a cap), a monosyllabic competitor picture (e.g., a cat), a polysyllabic competitor picture (e.g., a captain) and a distractor (e.g., a beaker). The relative proportion of fixations to the two types of competitor pictures changed as a function of the position of the target word in the utterance, demonstrating that lexical competition is modulated by prosodically conditioned phonetic variation.