The question of whether there exist sex differences in the functional organization of the brain for language represents an area of considerable debate. A long held, but unconfirmed hypothesis posits that in general, language functions are more likely to be highly lateralized in males but represented in both cerebral hemispheres in females. Here we use echo-planar functional magnetic resonance imaging (fMRI) to study 38 right-handed subjects (19 males and 19 females) during orthographic (letter recognition), phonological (rhyme) and semantic (semantic category) tasks. We find significant sex differences in activation patterns during phonological tasks: in males, brain activation is localized to left inferior frontal gyrus (IFG) regions; in females the pattern of activation is very different, engaging more diffuse neural systems involving both left and right IFG regions. These data provide the first clear evidence of sex differences in the functional organization of the brain for language and indicate that these differences exist at the level of phonological processing.