Two experiments investigated the influence of sentential context on the relative ease of deriving a particular meaning for novel and familiar compounds. Experiment 1 determined which of two possible meanings was preferred for a set of novel phrases. Experiment 2 used both novel (e.g., "brain sponge") and familiar compounds (e.g., "bug spray"). The compounds appeared in a sentential context that supported either the dominant or subdominant meaning. Next, participants saw either the dominant or subdominant definition and indicated whether it was plausible. When the definition was consistent with the preceding sentence, the participants were more likely to consider the definition plausible regardless of whether the compound was novel or familiar, although this difference was more pronounced for novel phrases than for familiar phrases. In terms of response times, the effect of sentential context also depended on the degree of dominance. The data suggest that the interpretation of compounds is affected by at least two sources of information: sentential context and the relative dominance of the preferred meaning. (Contains 3 figures and 2 footnotes.)