How are violations of phonological constraints processed in word comprehension? The present article reports the results of an event-related potentials (ERP) study on a phonological constraint of German that disallows identical segments within a syllable or word (CC[subscript i]VC[subscript i]). We examined three types of monosyllabic CCVC words: (a) existing words ([esh]p[epsilon]k), (b) wellformed novel words ([esh]p[epsilon]f), and (c) illformed novel words ([esh]p[epsilon]p) as instances of Obligatory Contour Principle (OCP) violations. Wellformed and illformed novel words evoked an N400 effect in comparison to existing words. In addition, illformed words produced an enhanced late posterior positivity effect compared to wellformed novel words. Our findings support the well-known observation that novel words evoke higher costs in lexical integration (reflected by N400 effects). Crucially, modulations of a late positive component (LPC) show that violations of phonotactic constraints influence later stages of cognitive processing even when stimuli have already been detected as non-existing. Thus, the comparison of electrophysiological effects evoked by the two types of non-existing words reveals the stages at which phonologically based structural wellformedness comes into play during word processing. (Contains 3 figures, 2 tables and 5 footnotes.)