The contrast between /ʎ/ and /ʝ/ has been lost in most Spanish varieties. This merger (yeísmo) has also been claimed to have spread to Basque. I study the palatal merger in Azpeitia Basque and Spanish, where simultaneous (2L1 Basque, Spanish) and early-sequential (L1 Basque, L2 Spanish) groups were tested in both languages. Comparing the two bilingual groups, this study found that, as a group, early-sequential bilinguals do not merge the phonemes in either of the two languages. However, while simultaneous bilinguals maintain the distinction in Basque, they tend to merge the phonemes in Spanish. Inter-speaker variation is found within each group and individual reports do not confirm global results. This study has also encountered different types of speakers as far as the palatal merger is concerned in Basque and Spanish: (1) non-mergers in any of the languages, (2) mergers in both languages, (3) mergers only in Spanish, and (4) mergers only in Basque.