We aimed to determine whether semantic relatedness between an incoming word and its preceding context can override expectations based on two types of stored knowledge: real-world knowledge about the specific events and states conveyed by a verb, and the verb's broader selection restrictions on the animacy of its argument. We recorded event-related potentials on post-verbal Agent arguments as participants read and made plausibility judgments about passive English sentences. The N400 evoked by incoming animate Agent arguments that violated expectations based on real-world event/state knowledge, was strongly attenuated when they were semantically related to the context. In contrast, semantic relatedness did not modulate the N400 evoked by inanimate Agent arguments that violated the preceding verb's animacy selection restrictions. These findings suggest that, under these task and experimental conditions, semantic relatedness can facilitate processing of post-verbal animate arguments that violate specific expectations based on real-world event/state knowledge, but only when the semantic features of these arguments match the coarser-grained animacy restrictions of the verb. Animacy selection restriction violations also evoked a P600 effect, which was not modulated by semantic relatedness, suggesting that it was triggered by propositional impossibility. Together, these data indicate that the brain distinguishes between real-world event/state knowledge and animacy-based selection restrictions during online processing. (Contains 6 tables and 4 figures.)