The present study uses electroencephalography (EEG) and a new stimulation paradigm, the ‘continuous stimulation paradigm’, to investigate the neural correlate of phonological processing in human auditory cortex. Evoked responses were recorded to stimuli consisting of a control sound (1000 ms) immediately followed by a test sound (150 ms). On half of the trials, the control sound was a noise and the test sound a vowel; to control for unavoidable effects of spectral change at the transition, the roles of the stimuli were reversed on the other half of the trials. The acoustical properties of the vowel and noise sounds were carefully matched to isolate the response specific to phonological processing. As the unspecific response to sound energy onset has subsided by the transition to the test sound, we hypothesized that the transition response from a noise to a vowel would reveal vowel-specific processing. Contrary to this expectation, however, the most striking difference between vowel and noise processing was a large, vertex-negative sustained response to the vowel control sound, which had a fast onset (30–50 ms) and remained constant throughout presentation of the vowel. The vowel-specific response was isolated using a subtraction technique analogous to that commonly applied in neuroimaging studies. This similarity in analysis methodology enabled close comparison of the EEG data collected in the present study with relevant functional magnetic resonance (fMRI) literature. Dipole source analysis revealed the vowel-specific component to be located anterior and inferior to primary auditory cortex, consistent with previous data investigating speech processing with fMRI.