The time-order error (TOE) refers to the influence of presentation order on performance accuracy in a discrimination task. Despite it being a well-documented perceptual bias, the underlying mechanisms have not been studied. In this study, observers were trained on a two-interval forced-choice procedure. The stimuli presented for discrimination were a standard, consisting of four tones presented at a 5-Hz rate, and targets, consisting of various rates higher than 5 Hz. Psychometric functions were measured for discrimination of the trained standard and targets, a novel standard of 13 Hz with higher target rates; and the trained 5 Hz standard with novel targets with rates below 5 Hz. Discrimination did not improve with training; in fact, accuracy declined when standard was presented in the first interval during the session, resulting in a TOE. The TOE was specific to the 5-Hz standard generalizing to the novel targets slower than 5 Hz, but not to the 13-Hz STANDARD. Analysis of the event-related magnetic field responses (ERFs) revealed a waveform to the whole stimulus, rather than to each tone in the train. Although ERFs in the second interval were attenuated independent of stimulus type, the M300 component in the second interval was attenuated only when the standard was first, but remained of equivalent magnitude when the standard was second. This was observed only in the two 5-Hz conditions. Combined, these results suggest that the TOE reflects the emergence of an internal representation of the standard, and that the M300 is potentially a neural correlate of plasticity.