The present research examined the interplay between lexical competition and acoustic-phonetic cues in word segmentation and recognition. Lexically ambiguous bisyllabic carriers were used in word-spotting experiments that required the participants to detect CVC or CV initially embedded words. The syllabification of the medial cluster (C.C vs .CC) and the lexical status of the post-boundary final chunk were manipulated. The word-spotting responses to CVC words were clearly inhibited by the overlapping word, leading to a target-offset misalignment effect. The CV word-spotting latencies also showed a misalignment effect, that tended to be reduced when the target was followed by a word. These results are interpreted in terms of a framework which combines the PWC and a prelexical segmentation heuristic based upon the onsets of syllables.