English speaking adults use information about prosodic structure to make inferences about a sentence’s intended meaning and disambiguate, for example, between the compound word greenhouse and the phrase green house. Our study investigates how adult speakers of Canadian English use the prosodic information in novel compounds and related phrases to accurately identify the meaning of ambiguous sentences. We used eye-tracking methodology to investigate online processing during a forced-choice task. The target structures are modeled after compounds like coloring books and phrases like drinking milk. In the first experiment, participants heard the target compound or phrase only in the target sentence, and in the second experiment, participants heard both the compound and phrase before they heard the target sentence. Each target sentence was heard twice while participants saw the two drawings of each item/action. Participants in both experiments showed differences in their gaze patterns when hearing compound vs. phrasal prosody and exhibited a phrasal bias in the first experiment, but not in the second. These results indicate that adult speakers of English process prosodic information in sentence comprehension, but there are differences in how compound and phrasal prosody are used in this process.