We used event-related potentials (ERPs) to investigate the timecourse of interactions between lexical-semantic and sub-lexical visual word-form processing during word recognition. Participants read sentence-embedded pseudowords that orthographically resembled a contextually-supported real word (e.g., “She measured the flour so she could bake a ceke …”) or did not (e.g., “She measured the flour so she could bake a tont …”) along with nonword consonant strings (e.g., “She measured the flour so she could bake a srdt …”). Pseudowords that resembled a contextually-supported real word (“ceke”) elicited an enhanced positivity at 130 msec (P130), relative to real words (e.g., “She measured the flour so she could bake a cake …”). Pseudowords that did not resemble a plausible real word (“tont”) enhanced the N170 component, as did nonword consonant strings (“srdt”). The effect pattern shows that the visual word recognition system is, perhaps counterintuitively, more rapidly sensitive to minor than to flagrant deviations from contextually-predicted inputs. The findings are consistent with rapid interactions between lexical and sub-lexical representations during word recognition, in which rapid lexical access of a contextually-supported word (CAKE) provides top-down excitation of form features (“cake”), highlighting the anomaly of an unexpected word “ceke”.