We present an efficient discriminative training procedure utilizing phone lattices. Different approaches to expediting lattice generation, statistics collection, and convergence were studied. We also propose a new discriminative training criterion, namely, minimum phone frame error (MPFE). When combined with the maximum mutual information (MMI) criterion using I-smoothing, replacing the standard minimum phone error (MPE) criterion with MPFE led to a small but consistent win in several applications. Phone-lattice-based discriminative training gave around 8 pct to 12 pct relative word error rate (WER) reduction in SRI’s latest English Conversational Telephone Speech and Broadcast News transcription systems developed for DARPA’s EARS project.