We conducted sentence completion and eye-tracking reading experiments to examine the interaction of multiple constraints in the resolution of a lexical thematic ambiguity. The ambiguity was introduced with prepositional "by"-phrases in passive constructions, which can be ambiguous between agentive and locative interpretations (e.g., "built by the contractor" versus "built by the corner"). The temporarily ambiguous sentences were embedded in contexts that created expectations for one or the other interpretation. The constraints involved, including discourse-based expectations, verb biases, and contingent lexical frequencies, were independently quantified with a corpus analysis and a rating experiment. Our results indicate that there was an interaction of contextual and more local factors such that the effectiveness of the contexts was mediated by the local biases. Application of an explicit integration-competition model to the off-hne (sentence completion) and on-line (eye-tracking) results suggests that, during the processing of these ambiguous prepositional phrases, there was an immediate and simultaneous integration of the relevant constraints resulting in competition between partially active alternative interpretations.