We examine occurrences of categorical assimilation (neutralizations) in French, voiced and unvoiced word-final obstruents, and their perception in different phonological contexts. We first show the categorical nature of the alternation, supported in Exp. 2 by perceptual categorization data. In Exp. 3, the interpretation of this first percept appears to be corrected in certain contexts, inducing compensation. We argue that context effects are phonological in this case, rather than auditory or phonetic. We conclude that linguistic knowledge of alternations is necessary in compensation for categorical assimilation.