The distinction between auditory and phonetic processes in speech perception was used in the design and analysis of an experiment. Earlier studies had shown that dichotically presented stop consonants are more often identified correctly when they share place of production (e.g., /ba-pa/) or voicing (e.g., /ba-da/) than when neither feature is shared (e.g., /ba-ta/). The present experiment was intended to determine whether the effect has an auditory or a phonetic basis. Increments in performance due to feature-sharing were compared for synthetic stop-vowel syllables in which formant transitions were the sole cues to place of production under two experimental conditions: (1) when the vowel was the same for both syllables in a dichotic pair, as in our earlier studies, and (2) when the vowels differed. Since the increment in performance due to sharing place was not diminished when vowels differed (i.e., when formant transitions did not coincide), it was concluded that the effect has a phonetic rather than an auditory basis. Right ear advantages were also measured and were found to interact with both place of production and vowel conditions. Taken together, the two sets of results suggest that inhibition of the ipsilateral signal in the perception of dichotically presented speech occurs during phonetic analysis.