A central issue in speech recognition is which basic units of speech are extracted by the auditory system and used for lexical access. One suggestion is that complex acoustic-phonetic information is mapped onto abstract phonological representations of speech and that a finite set of phonological features is used to guide speech perception. Previous studies analyzing the N1m component of the auditory evoked field have shown that this holds for the acoustically simple feature place of articulation. Brain magnetic correlates indexing the extraction of acoustically more complex features, such as lip rounding (ROUND) in vowels, have not been unraveled yet. The present study uses magnetoencephalography (MEG) to describe the spatial-temporal neural dynamics underlying the extraction of phonological features. We examined the induced electromagnetic brain response to German vowels and found the event-related desynchronization in the upper beta-band to be prolonged for those vowels that exhibit the lip rounding feature (ROUND). It was the presence of that feature rather than circumscribed single acoustic parameters, such as their formant frequencies, which explained the differences between the experimental conditions. We conclude that the prolonged event-related desynchronization in the upper beta-band correlates with the computational effort for the extraction of acoustically complex phonological features from the speech signal. The results provide an additional biomagnetic parameter to study mechanisms of speech perception.