Humans use prior expectations to improve perception, especially of sensory signals that are degraded or ambiguous. However, if sensory input deviates from prior expectations, correct perception depends on adjusting or rejecting prior expectations. Failure to adjust or reject the prior leads to perceptual illusions especially if there is partial overlap (hence partial mismatch) between expectations and input. With speech, “Slips of the ear” occur when expectations lead to misperception. For instance, a entomologist, might be more susceptible to hear "The ants are my friends" for "The answer, my friend" (in the Bob Dylan song "Blowing in the Wind"). Here, we contrast two mechanisms by which prior expectations may lead to misperception of degraded speech. Firstly, clear representations of the common sounds in the prior and input (i.e., expected sounds) may lead to incorrect confirmation of the prior. Secondly, insufficient representations of sounds that deviate between prior and input (i.e., prediction errors) could lead to deception. We used cross-modal predictions from written words that partially match degraded speech to compare neural responses when male and female human listeners were deceived into accepting the prior or correctly reject it. Combined behavioural and multivariate representational similarity analysis of functional magnetic resonance imaging data shows that veridical perception of degraded speech is signalled by representations of prediction error in the left superior temporal sulcus. Instead of using top-down processes to support perception of expected sensory input, our findings suggest that the strength of neural prediction error representations distinguishes correct perception and misperception.