The ability to recognize speech acts (verbal actions) in conversation is critical for everyday interaction. However, utterances are often underspecified for the speech act they perform, requiring listeners to rely on the context to recognize the action. The goal of this study was to investigate the time-course of auditory speech act recognition in action-underspecified utterances and explore how sequential context (the prior action) impacts this process. We hypothesized that speech acts are recognized early in the utterance to allow for quick transitions between turns in conversation. Event-related potentials (ERPs) were recorded while participants listened to spoken dialogues and performed an action categorization task. The dialogues contained target utterances that each of which could deliver three distinct speech acts depending on the prior turn. The targets were identical across conditions, but differed in the type of speech act performed and how it fit into the larger action sequence. The ERP results show an early effect of action type, reflected by frontal positivities as early as 200 ms after target utterance onset. This indicates that speech act recognition begins early in the turn when the utterance has only been partially processed. Providing further support for early speech act recognition, actions in highly constraining contexts did not elicit an ERP effect to the utterance-final word. We take this to show that listeners can recognize the action before the final word through predictions at the speech act level. However, additional processing based on the complete utterance is required in more complex actions, as reflected by a posterior negativity at the final word when the speech act is in a less constraining context and a new action sequence is initiated. These findings demonstrate that sentence comprehension in conversational contexts crucially involves recognition of verbal action which begins as soon as it can.