Previous studies have failed to demonstrate lexically induced delays in phoneme recognition, casting doubt on interactive models of speech perception. We present TRACE simulations that explain these failures: previously tested conditions failed to produce lexically induced delay effects because the input was too unambiguous and the control condition was conflated with lexical status and neighborhood structure. Since between-layer connections are solely excitatory, between-layer delay effects can emerge only indirectly through facilitation of within-layer competition. If the lexically consistent phoneme partially matches the input acoustics, it will become partially active. Additional support from lexical feedback will extend the duration of competition between the acoustically present phoneme and the lexically consistent phoneme, thus delaying detection. This prediction holds across a range of relevant parameter values. Two behavioral experiments tested and confirmed this prediction. These results answer one of the challenges to the interactive view of speech perception. © 2005 Elsevier Inc. All rights reserved.