The present study investigated the mechanisms underlying perceptual compensation for assimilation in novel words. During training, participants learned canonical versions of novel spoken words (e.g., "decibot") presented in isolation. Following exposure to a second set of novel words the next day, participants carried out a phoneme monitoring task. Here, the novel words were presented with final alternations (e.g., "decibop") in carrier sentences that either licensed assimilation (viable context: "Our decibop behaved badly") or did not (unviable context: "Our decibop does very well"). Listeners had to monitor for the underlying form of the assimilated consonant (e.g., /t/ in "decibop"). Results showed more responses corresponding to the underlying form in viable than in unviable contexts. This viability effect was equivalent for novel words learned on the same day and on the previous day but was absent for unexposed control items. The processing difference between exposed and control novel words supports the idea that compensation for assimilation interacts with newly acquired phonological information and suggests that contextual compensation for assimilation is enhanced by lexical knowledge. (Contains 3 tables, 1 figure and 2 footnotes.)