Ferdinand de Saussure’s Course in General Linguistics (CLG in French), edited and published by Charles Bally and Albert Sechehaye in 1916, contains two chapters on phonology : “Definition of the Concept of Phoneme” and “The Phoneme in the Spoken Chain”. These texts were criticised by Nicolas Troubetzkoy (1949) and Roman Jakobson (1976) and judged inconsistent and as a result lost their scientific credibility and are mostly forgotten today. Prague School criticism was simultaneously laudatory and harsh. Recognizing the highly original nature of Saussure’s contribution, it was criticized for being contradictory in its amalgamation of phonetics and phonology. And clearly, some passages from the Course in General Linguistics appear to support Troubetzkoy’s and Jakobson’s claim. Yet, this view rests on a misunderstanding.Close reading of Saussure shows rather that he sought to describe a double system of categories and functions uncovering a linguistic law. Saussure’s thesis strictly – but subtly – maintains the disctinction between phonectics and phonology, contrary to the assertions of the Prague linguists. Indeed a systematic reading of Saussure’s Principes de phonologie shows no “contradiction”, no trace of any “naive psychologism”, nor a “return to procedures of motor phonetics” as Jakobson would have it. In this article, I therefore endeavor to reconstruct and test Saussure’s discredited model. I leave it to historians to explain how it is such a key and operational analysis set midway through the most widely read general linguistic treatise could have fallen into such indifference.