Grammatical transformation is a verbal reasoning task requiring judging the veracity of statements describing the spatial order of letter sets. We studied 18 adults with FMRI while they performed grammatical transformations of varying complexity levels (2-letter, 3-letter, and 4-letter sentences). Brain regions activated by 2-letter sentences included the visuospatial processing regions of the bilateral parietal lobes and the frontal operculum. A linear increase in sentence complexity engaged dorsolateral and ventrolateral prefrontal cortex as well as significantly increased activation within 2LTR areas. These data provide evidence that grammatical transformation reasoning relies primarily on the posterior visuospatial working memory system and need not necessarily engage the prefrontal cortex. Increasing the complexity of grammatical transformation, though, activates prefrontal cortex.