This study aimed to investigate the mechanisms underlying joke comprehension using event-related potentials (ERPs). Fourteen healthy college students were presented with the context of a story without its joke or nonjoke ending, and then, when the story ending was presented, they were asked to make a funny/unfunny judgment about these endings. The behavioral results showed that there was no significant difference between funny and unfunny items, which meant that subjects could understand funny items as easily as unfunny ones. However, the ERP results showed that funny items initially elicited a more negative ERP deflection (N350-450) over frontocentral scalp regions. Dipole analysis localized the generators in the left temporal gyrus and the left medial frontal gyrus; it is suggested that these areas might be involved in detecting the incongruent element in joke comprehension. Between 600 and 800 ms, funny items subsequently elicited a more negative ERP deflection (N600-800) over frontocentral scalp regions and a more positive ERP deflection (P600-800) over posterior scalp regions. Dipole analysis localized the generator in the anterior cingulate cortex (ACC), an area involved in the breaking of mental set/expectation and the forming of novel associations. Finally, funny items elicited a more positive ERP deflection (P1250-1400) over anterior and posterior scalp regions. Dipole analysis localized the generators in the middle frontal gyrus and the fusiform gyrus, areas that might be related to the affective appreciation stage in joke process. Unlike that of Coulson and Kutas (2001), the present study might support the hypothesis of a three stage model of humor processing (humor detection, resolution of incongruity and humor appreciation).