The study of signed languages allows the dissociation of sensorimotor and cognitive neural components of the language signal. Here we investigated the neurocognitive processes underlying the monitoring of two phonological parameters of sign languages: handshape and location. Our goal was to determine if brain regions processing sensorimotor characteristics of different phonological parameters of sign languages were also involved in phonological processing, with their activity being modulated by the linguistic content of manual actions. We conducted an fMRI experiment using manual actions varying in phonological structure and semantics: (1) signs of a familiar sign language (British Sign Language), (2) signs of an unfamiliar sign language (Swedish Sign Language), and (3) invented nonsigns that violate the phonological rules of British Sign Language and Swedish Sign Language or consist of nonoccurring combinations of phonological parameters. Three groups of participants were tested: deaf native signers, deaf nonsigners, and hearing nonsigners. Results show that the linguistic processing of different phonological parameters of sign language is independent of the sensorimotor characteristics of the language signal. Handshape and location were processed by different perceptual and task-related brain networks but recruited the same language areas. The semantic content of the stimuli did not influence this process, but phonological structure did, with nonsigns being associated with longer RTs and stronger activations in an action observation network in all participants and in the supramarginal gyrus exclusively in deaf signers. These results suggest higher processing demands for stimuli that contravene the phonological rules of a signed language, independently of previous knowledge of signed languages. We suggest that the phonological characteristics of a language may arise as a consequence of more efficient neural processing for its perception and production.