The neighborhood activation model (NAM) of auditory word recognition describes the processes by which a stimulus word is identified in the context of phonetically similar words activated in memory. Stimulus input activates a set of acoustic‐phonetic patterns in memory that must be discriminated and chosen among. These acoustic‐phonetic patterns receive activation levels proportional to their similarities to the stimulus input. The activation levels may then be adjusted by biases arising from higher‐level information, such as word frequency. The interaction of the bottom‐up sensory input and top‐down biasing information is assumed to take place within individual processing units called word decision units. These units monitor the activation levels of their acoustic‐phonetic patterns, any higher‐level information that may optimize decisions among the competing patterns, and the activity of all other word decision units. The NAM states that increasing the number of acoustic‐phonetic patterns activated in memory by the stimulus input will slow processing and reduce identification accuracy. It also states that effects of word frequency are directly tied to the number and nature of similar words activated in memory and that word frequency is not intrinsic to the activation levels of the acoustic‐phonetic patterns. [Work supported by NIH Grant NS‐12179.]