Despite considerable research interest, it is still an open issue as to how morphologically complex words such as “car+s” are represented and processed in the brain. We studied the neural correlates of the processing of inflected nouns in the morphologically rich Finnish language. Previous behavioral studies in Finnish have yielded a robust inflectional processing cost, i.e., inflected words are harder to recognize than otherwise matched morphologically simple words. Theoretically this effect could stem either from decomposition of inflected words into a stem and a suffix at input level and/or from subsequent recombination at the semantic–syntactic level to arrive at an interpretation of the word. To shed light on this issue, we used magnetoencephalography to reveal the time course and localization of neural effects of morphological structure and frequency of written words. Ten subjects silently read high- and low-frequency Finnish words in inflected and monomorphemic form. Morphological complexity was accompanied by stronger and longerlasting activation of the left superior temporal cortex from 200 ms onwards. Earlier effects of morphology were not found, supporting the view that the well-established behavioral processing cost for inflected words stems from the semantic–syntactic level rather than from early decomposition. Since the effect of morphology was detected throughout the range of word frequencies employed, the majority of inflected Finnish words appears to be represented in decomposed form and only very high-frequency inflected words may acquire full-form representations.