We compared effects of adjacent (e.g., atricle-ARTICLE) and non-adjacent (e.g., actirle-ARTICLE) transposed-letter (TL) primes in an ERP study using the sandwich priming technique. TL priming was measured relative to the standard double-substitution condition. We found significantly stronger priming effects for adjacent transpositions than non-adjacent transpositions (with 2 intervening letters) in behavioral responses (lexical decision latencies), and the adjacent priming effects emerged earlier in the ERP signal, at around 200 ms post-target onset. Non-adjacent priming effects emerged about 50 ms later and were short-lived, being significant only in the 250-300 ms time-window. Adjacent transpositions on the other hand continued to produce priming in the N400 time-window (300-500 ms post-target onset). This qualitatively different pattern of priming effects for adjacent and non-adjacent transpositions is discussed in the light of different accounts of letter transposition effects, and the utility of drawing a distinction between positional flexibility and positional noise.