The phoneme as a viable phonological unit for capturing relevant surface contrasts has been rejected within generative phonology. However, certain diachronic and synchronic effects can only be explained in terms of the phoneme. The historical phenomena of denasalization in French, depalatalization in Rumanian, delabialization in Romance, palatalization and labialization in Nupe, and palatalization in Japanese are due to surface contrast rather than to statable morphophonemic or phonetic processes. From these observations I conclude that the phoneme must be recognized as a phonological entity. Synchronically, a phonemic representation is not to be discovered by applying a set of procedures to a phonetic representation, nor does it exist as an autonomous level within a generative phonology; rather, it is to be characterized as a representation of relevant surface contrasts which is deducible from the function of the rules within a generative phonology. Thus the phoneme does in fact have a place in generative phonology without in any way changing the theoretical basis.