An automatic speech recognition system includes a recognition engine, a compound lexicon, and a compounder. The recognition engine generates a recognition result having a sequence of recognized words representative of an input utterance. The words in the recognition result include compound word components which may be combined to form compound words. The engine uses a recognition vocabulary of words and a language model which, for a given position in the sequence of recognized words and for selected words in the recognition vocabulary, associates a likelihood of such word occurring at such position. The compound lexicon contains a plurality of compound word components and component connecting links structured so that links are present between components that are more likely to occur together than to occur as separate words. The compounder replaces adjacent words in the sequence of recognized words which have corresponding linked components in the lexicon with a concatenation of the corresponding linked components. The probabilities in the language model minimize the likelihood of a component in the lexicon occurring in the recognition result without a corresponding linked component for concatenation.