How do violations of predictability and plausibility affect online language processing? How does it affect longer-term memory and learning when predictions are disconfirmed by plausible or implausible words? We investigated these questions using a self-paced sentence reading and noun recognition task. Critical sentences violated predictability or plausibility or both, for example, “Since Anne is afraid of spiders, she doesn’t like going down into the … basement (predictable, plausible), garden (unpredictable, somewhat plausible), moon (unpredictable, deeply implausible).” Results from sentence reading showed earlier-emerging effects of predictability violations on the critical noun, but later-emerging effects of plausibility violations after the noun. Recognition memory was exclusively enhanced for deeply implausible nouns. The earlier-emerging predictability effect indicates that having word form predictions disconfirmed is registered very early in the processing stream, irrespective of semantics. The later-emerging plausibility effect supports models that argue for a staged architecture of reading comprehension, where plausibility only affects a post-lexical integration stage. Our memory results suggest that, in order to facilitate memory and learning, a certain magnitude of prediction error is required.