Perceptual experience results from a complex interplay of bottom-up input and prior knowledge about the world, yet the extent to which knowledge affects perception, the neural mechanisms underlying these effects, and the stages of processing at which these two sources of information converge, are still unclear. In a series of experiments we show that verbal cues not only help recognition of ambiguous "Mooney" images, but improve accuracy and RTs in a same/different discrimination task. We then used electroencephalography (EEG) to better understand the mechanisms of this effect. The improved discrimination of images previously made meaningful was accompanied by a larger occipital-parietal P1 evoked response to the meaningful versus meaningless target stimuli. Time-frequency analysis of the interval between the two stimuli (just prior to the target stimulus) revealed increases in the power of posterior alpha-band (8-14 Hz) oscillations when the meaning of the stimuli to be compared was trained. The magnitude of the prestimulus alpha difference and the P1 amplitude difference was positively correlated across individuals. These results suggest that prior knowledge prepares the brain for upcoming perception via the modulation of prestimulus alpha-band oscillations, and that this preparatory state influences early (~120 ms) stages of subsequent visual processing.