Musical processing studies have shown that unexpected endings in familiar musical sequences produce extended latencies of the P300 component. The present study sought to identify event-related potential (ERP) correlates of musical expectancy by entraining participants with rule-governed chord sequences and testing whether unexpected endings created similar responses. Two experiments were conducted in which participants performed grammaticality classifications without training (Experiment 1) and with training (Experiment 2). In both experiments, deviant chords differing in instrumental timbre elicited a MMN/P3a waveform complex. Violations related to learned patterns elicited an early right anterior negativity and P3b. Latency and amplitude of peak components were modulated by the physical characteristics of the chords, expectations due to prior knowledge of musical harmony, and contextually defined expectations developed through entrainment.