Neuroanatomical models hypothesize a role for the dorsal auditory pathway in phonological processing as a feedforward efferent system (Davis and Johnsrude, 2007; Rauschecker and Scott, 2009; Hickok et al., 2011). But the functional organization of the pathway, in terms of time course of interactions between auditory, somatosensory, and motor regions, and the hemispheric lateralization pattern is largely unknown. Here, ambiguous duplex syllables, with elements presented dichotically at varying interaural asynchronies, were used to parametrically modulate phonological processing and associated neural activity in the human dorsal auditory stream. Subjects performed syllable and chirp identification tasks, while event-related potentials and functional magnetic resonance images were concurrently collected. Joint independent component analysis was applied to fuse the neuroimaging data and study the neural dynamics of brain regions involved in phonological processing with high spatiotemporal resolution. Results revealed a highly interactive neural network associated with phonological processing, composed of functional fields in posterior temporal gyrus (pSTG), inferior parietal lobule (IPL), and ventral central sulcus (vCS) that were engaged early and almost simultaneously (at 80–100 ms), consistent with a direct influence of articulatory somatomotor areas on phonemic perception. Left hemispheric lateralization was observed 250 ms earlier in IPL and vCS than pSTG, suggesting that functional specialization of somatomotor (and not auditory) areas determined lateralization in the dorsal auditory pathway. The temporal dynamics of the dorsal auditory pathway described here offer a new understanding of its functional organization and demonstrate that temporal information is essential to resolve neural circuits underlying complex behaviors.