Context and hand posture modulate the neural dynamics of tool-object perception

► We study neural encoding of context and grasps in tool-object perception with EEG. ► Nonfunctional grasps of ambiguous tool-use engages bilateral parietofrontal areas. ► Nonfunctional grasps of functional tool-use engages right parietofrontal areas. ► EEG temporal and spectral characteristics were distinct to context of tool-use. ► Areas other than left parietofrontal also encode complex hand-object actions.