Research consistently indicates the importance of phonological processing in early reading development, yet the role of phonology in skilled reading is still not well understood. Two event-related potential (ERP) experiments investigated the nature and time course of phonological processing during skilled visual word recognition using a masked priming paradigm. Phonological syllable priming was examined by presenting prime-target pairs either with the same first syllable, or with one letter more or fewer. In this visually matched design, items like po##-PONY and pon###-PONDER appeared in the congruent condition. Conversely, pon#-PONY and po####-PONDER appeared in the incongruent condition. In both experiments, the magnitude of the first negative peak (N1) was reduced in the phonologically congruent condition as compared to the incongruent condition. This syllable congruency effect is the first neurophysiological evidence for phonological syllable activation in the initial moments of visual word recognition. The early time course of this activation indicates that suprasegmental phonological processing is fundamental to skilled reading.