The ability to comprehend phrases is an essential integrative property of the brain. Here we evaluate the neural processes that enable the transition from single word processing to a minimal compositional scheme. Previous research has reported conflicting timing effects of composition, and disagreement persists with respect to inferior frontal and posterior temporal contributions. To address these issues, 19 patients (10 male, 19 female) implanted with penetrating depth or surface subdural intracranial electrodes heard auditory recordings of adjective-noun, pseudoword-noun and adjective-pseudoword phrases and judged whether the phrase matched a picture. Stimulus-dependent alterations in broadband gamma activity, low frequency power and phase-locking values across the language-dominant left hemisphere were derived. This revealed a mosaic located on the lower bank of the posterior superior temporal sulcus (pSTS), in which closely neighboring cortical sites displayed exclusive sensitivity to either lexicality or phrase structure, but not both. Distinct timings were found for effects of phrase composition (210–300 ms) and pseudoword processing (approximately 300–700 ms), and these were localized to neighboring electrodes in pSTS. The pars triangularis and temporal pole encoded anticipation of composition in broadband low frequencies, and both regions exhibited greater functional connectivity with pSTS during phrase composition. Our results suggest that the pSTS is a highly specialized region comprised of sparsely interwoven heterogeneous constituents that encodes both lower and higher level linguistic features. This hub in pSTS for minimal phrase processing may form the neural basis for the human-specific computational capacity for forming hierarchically organized linguistic structures.