In this study we asked whether nonwords created by transposing two phonemes (/biks[open-mid back rounded vowel]t/) are perceived as being more similar to their base words (/bisk[open-mid back rounded vowel]t/) than nonwords created by substituting two phonemes (/bipf[open-mid back rounded vowel]t/). Using the short-term phonological priming and a lexical-decision task, Experiment 1 showed that transposed-phoneme nonword primes lead to shorter RTs on the target base words than substituted-phoneme nonword primes. Using a single-presentation lexical-decision task, Experiment 2 showed that transposed-phoneme nonwords lead to longer "no" decision responses than substituted-phoneme nonwords. In both Experiments 1 and 2, the transposed-phoneme effect was observed when the transposed phonemes were adjacent (/biks[open-mid back rounded vowel]t/-/bisk[open-mid back rounded vowel]t/) but not when they were distant (/[voiceless palato-alveolar fricative]oloka/-/[voiceless palato-alveolar fricative]okola/). Our findings suggest that nonwords created by transposing adjacent phonemes in real words generate more activation of the lexical representations associated with the base words than do matched control nonwords. More generally, our findings present a challenge for models of spoken word recognition that code for the precise order of speech segments.