We used a novel nonword detection task to examine the lexical competition principle postulated in most models of spoken word recognition. To do so, in Experiment 1 we presented sequences of spoken words with half of the sequences containing a nonword, and the target nonword (i.e., press a response key whenever you detect a nonword in the sequence) could either be phonologically related (a phonological neighbor) or unrelated to the immediately preceding word. We reasoned that the reactivation of a phonological neighbor during target nonword processing should delay the moment at which a nonword decision can be made. Contrary to our hypothesis, participants were faster at detecting nonwords when they were preceded by a phonological neighbor compared with an unrelated word. In Experiment 2, an inhibitory effect of phonological relatedness on nonword decisions was observed in a classic priming situation using the same set of related and unrelated word-nonword pairs. We discuss the implications of these findings in regard to the main models of spoken word recognition, and conclude that our specific experimental set-up with phonological neighbors embedded in spoken sentences is more sensitive to cooperative interactions between co-activated sublexical representations than lexical competition between co-activated lexical representations, with the latter being modulated by whether or not the words compete for the same slot in time.