Neuromagnetic fields were recorded from normal subjects to study the time course of cerebral neural activation while they performed a matching task of visual stimuli in which sequentially presented Japanese characters or unreadable pseudo-characters were compared according to phonological (reading of the characters) or graphical (geometry of the pseudo-characters) identity. In response to the single real-character or pseudo-character which was presented the latest distinct magnetic field components were observed, from which current dipole sources of the fields were localized in the individual magnetic resonance images of the brain. In the phonological identification, the sources were found in the parieto-occipital extrastriate cortex at 155-210 ms following the character presentation, and in the posterior temporal region (part of the Wernicke's area) and the posterior superior temporal region of the visual/auditory association cortex at 210-410 ms. The activity in these temporal regions was left hemisphere dominant, and may be the neural basis of phonological processing of the visual characters. In the graphical identification, sources occurring at 125-250 ms were noted in the inferior temporo-occipital region, and those at 180-460 ms in the posterior temporal and posterior superior temporal regions of the right hemisphere. These results indicate that the activities in the temporal area are lateralized to the left for the phonological processing and to the right for the graphical processing.