This paper investigates the acquisition of novel segmental categories that are similar to native language segments among two groups of non-native speakers and a native-speaker control group. English and Japanese both contain voiceless alveolar and post-alveolar fricatives, but while the alveolars are effectively identical, the post-alveolars differ in their precise places of articulation. English includes a palato-alveolar while Japanese includes an alveolo-palatal. We elicited pronunciations of these segments in both English and Japanese by a group of intermediate L2 learners of English in Japan and a group of Japanese–English late bilinguals with experience living and studying abroad, plus a third group made up of English native-speakers as a control group. Measurements of Center of Gravity taken at the midpoint of each fricative and F2 taken at the appearance of formant structure immediately following the fricative revealed expansive category ranges among the L2 learners but contracted categories among the bilinguals, with evidence of a new, independent post-alveolar fricative added to their L2 segmental inventory. L2 learners were found to experience persistent transfer effects from phonological neutralization of this contrast in Japanese, whereas bilinguals were found to have overcome such effects.