A continuing debate in speech perception research has been whether phenomena such as categorical perception and trading relations are explained by basic psychoacoustic mechanisms or rather by a specialized phonetic mode of perception. Sinewave speech analogs have provided an opportunity to test these alternatives, since the same stimuli can be heard as either distorted speech or nonspeech sounds by different groups of listeners. The psychoacoustic hypothesis would predict similar between‐group performance, while the phonetic hypothesis would predict systematic group differences. Several recent findings have favored a distinct phonetic mode in perception of sinewave speech. Best and Studdert‐Kennedy [Proc. 10th Int. Congr. Phon. Sci (1983)] used a labeling test with a sinewave‐analog /ra/‐/la/ continuum, and found that speech‐biased listeners performed in a clearly categorical manner, whereas “music”‐biased listeners performed near chance. The present research strengthened that finding, by employing AXB identification without overt labels, and AXB discrimination. Control tests with a full‐formant /ra/‐/la/ continuum and sinewave analogs of their isolated F3 trajectories were included. The two groups performed identically with each control continuum, yet they differed dramatically with the sinewave syllables. In support of the phonetic hypothesis, only the speech‐biased listeners systematically classified the stimuli into two clear categories, and showed improved discrimination around the catagory boundary. [Work supported by NIH grant HD‐01994 to Haskins Laboratories.]