Four experiments are reported that examine the effects of homophony (e.g., SAIL/SALE) on response latency in a lexical decision task. The results indicated that an effect of homophony was evident only if the nonword distractors consisted of legal, pronounceable strings (e.g., SLINT), but that this effect disappeared if the nonwords sounded like English words (e.g., BRANE). An optional encoding strategy is proposed to account for this differential effect. It is suggested that while both graphemic and phonemic encoding occurred simultaneously, naive subjects tended to rely on the outcome of the phonological route. However, when such reliance produced a high error rate (i.e., when the nonwords sounded like English words),. these subjects were able to abandon a phonological strategy and rely on the graphemic encoding procedure instead. Two further aspects of the results are of interest. First, the less frequent member of a homophone pair was slower when compared with a control item if the nonword distractors were of the SLINT type, but not different if they were of the BRANE type. The high-frequency members did not differ from their controls in either nonword environment. Second, in a homophone "repetition" experiment, the frequency order of presentation within pairs of homophones (i.e., the high-frequency member followed by the low-frequency member, or vice versa) had a substantial effect. A spelling recheck procedure and a response-inhibitory mechanism are postulated to incorporate these effects into a dual-encoding direct-access model of word recognition.