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Various studies have suggested that auditory deviance detection is organized in a hierarchical manner with ascending levels of complexity. Event-related potentials (ERP) are considered to reflect different cortical processing stages. In the current electroencephalographic study, we employed an auditory sequence oddball paradigm to investigate different levels of cortical auditory processing and the contribution of neuronal habituation and prediction error mechanism to N1 and Mismatch Negativity (MMN). Our findings suggest that N1 reflects a lower cortical process primarily involved in the encoding of simple physical features and is thus mainly modulated by neuronal attenuation and not complex top-down mechanisms. By analyzing within-sequence signal differences, we divided the MMN into distinct subcomponents reflecting different hierachical levels of auditory processing. We determined a "first-order" MMN that reflects the processing of simple deviant features (such as frequency) and "higher-order" MMNs that occur at regularity violation of complex patterns or unexpected inputs that do not allow further predictions. In our source localization analysis, both the primary auditory cortex and left IFG were primarily involved in the detection of simple, physically deviant features, while the right IFG was associated with the processing of novel, unexpected auditory inputs and the ACC with regularity violation of known patterns. Summarizing, our results might contribute to a better understanding of the different complexities of neuronal habituation and prediction error mechanisms at different levels of cortical auditory processing., Competing Interests: Declaration of competing interest There is no conflict of interest, financial or otherwise, related to this work for any of the authors., (Copyright © 2019 Elsevier Inc. All rights reserved.)