We investigated how spoken words are recognized when they have been altered by phonological assimilation. Previous research has shown that there is a process of perceptual compensation for phonological assimilations. Three recently formulated proposals regarding the mechanisms for compensation for assimilation make different predictions with regard to the level at which compensation is supposed to occur as well as regarding the role of specific language experience. In the present study, Hungarian words and nonwords, in which a viable and an unviable liquid assimilation was applied, were presented to Hungarian and Dutch listeners in an identification task and a discrimination task. Results indicate that viably changed forms are difficult to distinguish from canonical forms independent of experience with the assimilation rule applied in the utterances. This reveals that auditory processing contributes to perceptual compensation for assimilation, while language experience has only a minor role to play when identification is required.