Visually presented letter strings consistently yield three MEG response components: the M170, associated with letter-string processing (Tarkiainen, Helenius, Hansen, Cornelissen, & Salmelin, 1999); the M250, affected by phonotactic probability, (Pylkkänen, Stringfellow, & Marantz, 2002); and the M350, responsive to lexical frequency (Embick, Hackl, Schaeffer, Kelepir, & Marantz, 2001). Pylkkänen et al. found evidence that the M350 reflects lexical activation prior to competition among phonologically similar words. We investigate the effects of lexical and sublexical frequency and neighborhood density on the M250 and M350 through orthogonal manipulation of phonotactic probability, density, and frequency. The results confirm that probability but not density affects the latency of the M250 and M350; however, an interaction between probability and density on M350 latencies suggests an earlier influence of neighborhoods than previously reported.