This paper describes an experiment in which two general hypotheses concerning speech perception are tested. According to the segment perception hypothesis the acoustic signal is interpreted in terms of segments analogous to those used by phoneticians in transcribing speech. The syllable perception hypothesis on the other hand holds that the speech signal is perceived in terms of syllable sized units. The experiment tests these two hypotheses by presenting subjects with a perceptual task for which the two make opposite predictions. Tokens with subcategorical mismatches were produced by cutting the fricatives [s] and [ʃ] from VC syllables (vowels were [i,a,o,u]) and recombining them with vowels which differed from the original context in terms of transitions and rounding. The segment perception hypothesis predicts that in syllables with transition mismatches (ie. transitions for [s] and with [ʃ] actually occurring) coarticulatory rounding on the actually occurring fricative will aid in the perception of [ʃ] and slow the perception of [s], while the lack of rounding on the actually occurring fricative will have the opposite effect. This is because the rounding makes [ʃ] a more extreme example of [ʃ] (and thus easier to categorize as such) while rounding makes an [s] less distinctly an [s]. The syllable perception hypothesis predicts that in syllables with transition mismatches coarticulatory rounding on the actually occurring fricative will aid the perception of [s] and hinder[ʃ] perception. This is because the [s] with rounding is acoustically closer to the prediction made on the basis of the transition on the vowel. Similarly, the [ʃ] with rounding is acoustically further removed from the [s] which is expected as a result of the transitions on the vowel in a mismatched syllable and thus should require more time to be perceived as [ʃ]. The results of the experiment reported here support the segment perception hypothesis. Subjects' perception of [s] in syllables with transition mismatches was inhibited by coarticulatory rounding while their perception of [ʃ] in syllables with transition mismatches was facilitated by coarticulatory rounding