Sentence processing takes place whenever a reader or listener processes a language utterance, either in isolation or in the context of a conversation or a text. Many studies of the human language comprehension process have focused on reading of single utterances (sentences) without context. Extensive research has shown that language comprehension is affected by context preceding a given utterance as well as many other factors.

Sentence comprehension has to deal with ambiguity in spoken and written utterances, for example lexical, structural, and semantic ambiguities. Ambiguity is ubiquitous, but people usually resolve it so effortlessly that they do not even notice it. For example, the sentence Time flies like an arrow has (at least) the interpretations Time moves as quickly as an arrow, A special kind of fly, called time fly, likes arrows and Measure the speed of flies like you would measure the speed of an arrow. Usually, readers will be aware of only the first interpretation. Educated readers though, spontaneously think about the arrow of time but inhibit that interpretation because it deviates from the original phrase and the temporal lobe acts as a switch.

Instances of ambiguity can be classified as local or global ambiguities. A sentence is globally ambiguous if it has two distinct interpretations. Examples are sentences like Someone shot the servant of the actress who was on the balcony (was it the servant or the actress who was on the balcony?) or The cop chased the criminal with a fast car (did the cop or the criminal have a fast car?). Comprehenders may have a preferential interpretation for either of these cases, but syntactically and semantically, neither of the possible interpretations can be ruled out.

Local ambiguities persist only for a short amount of time as an utterance is heard or written and are resolved during the course of the utterance so the complete utterance has only one interpretation. Examples include sentences like The critic wrote the book was enlightening, which is ambiguous when The critic wrote the book has been encountered, but was enlightening remains to be processed. Then, the sentence could end, stating that the critic is the author of the book, or it could go on to clarify that the critic wrote something about a book. The ambiguity ends at was enlightening, which determines that the second alternative is correct.

When readers process a local ambiguity, they settle on one of the possible interpretations immediately without waiting to hear or read more words that might help decide which interpretation is correct (the behaviour is called incremental processing). If readers are surprised by the turn the sentence really takes, processing is slowed and is visible for example in reading times. Locally-ambiguous sentences have, therefore, been used as test cases to investigate the influence of a number of different factors on human sentence processing. If a factor helps readers to avoid difficulty, it is clear that the factor plays a factor in sentence processing.

Experimental research has spawned a large number of hypotheses about the architecture and mechanisms of sentence comprehension. Issues like modularity versus interactive processing and serial versus parallel computation of analyses have been theoretical divides in the field.

A modular view of sentence processing assumes that each factor involved in sentence processing is computed in its own module, which has limited means of communication with the other modules. For example, syntactic analysis creation takes place without input from semantic analysis or context-dependent information, which are processed separately. A common assumption of modular accounts is a feed-forward architecture in which the output of one processing step is passed on to the next step without feedback mechanisms that would allow the output of the first module to be corrected. Syntactic processing is usually taken to be the most basic analysis step, which feeds into semantic processing and the inclusion of other information. A separate mental module parses sentences and lexical access happens first. Then, one syntactic hypothesis is considered at a time. There is no initial influence of meaning, or semantic. Sentence processing is supported by a temporo-frontal network. Within the network, temporal regions subserve aspects of identification and frontal regions the building of syntactic and semantic relations. Temporal analyses of brain activation within this network support syntax-first models because they reveal that building of syntactic structure precedes semantic processes and that these interact only during a later stage.

Interactive accounts assume that all available information is processed at the same time and can immediately influence the computation of the final analysis. In the interactive model of sentence processing, there is no separate module for parsing. Lexical access, syntactic structure assignment, and meaning assignment happen at the same time in parallel. Several syntactic hypotheses can be considered at a time. The interactive model demonstrates an on-line interaction between the structural and lexical and phonetic levels of sentence processing. Each word, as it is heard in the context of normal discourse, is immediately entered into the processing system at all levels of description, and is simultaneously analyzed at all these levels in the light of whatever information is available at each level at that point in the processing of the sentence. Interactive models of language processing assume that information flows both bottom-up and top-down, so that the representations formed at each level may be influenced by higher as well as lower levels. A framework called the interactive activation framework that embeds this key assumption among others, including the assumption that influences from different sources are combined nonlinearly. The nonlinearity means that information that may be decisive under some circumstances may have little or no effect under other conditions. In the interactive activation framework, the knowledge that guides processing is stored in the connections between units on the same and adjacent levels. The processing units that they connect may receive input from a number of different sources, which allows the knowledge that guides processing to be completely local while, at the same time, allowing the results of processing at one level to influence processing at other levels, both above and below. A basic assumption of the framework is that processing interactions are always reciprocal; it is this bi-directional characteristic that makes the system interactive. Bi-directional excitatory interactions between levels allow mutual simultaneous constraint among adjacent levels, and bi-directional inhibitory interactions within a level allow for competition among mutually incompatible interpretations of a portion of an input. The between-level excitatory interactions are captured in the models in two-way excitatory connections between mutually compatible processing units. Syntactic ambiguities are in fact based at the lexical level. In addition, more recent studies with more sensitive eye tracking machines have shown early context effects. Frequency and contextual information will modulate the activation of alternatives even when they are resolved in favor of the simple interpretation. Structural simplicity is cofounded with frequency, which goes against the garden path theory