Perceived object-directed actions can only be understood when knowledge about the goal-directed movements and about the function of the objects that are employed is taken into account. We investigated how these two aspects are processed during action comprehension. In the experiments, the participants observed object-directed actions, which they had to judge with regard to their appropriateness. The actions were presented as static frames showing a hand wielding an instrument and a potential target object of the action. The two elements could either match or mismatch spatially or functionally. A spatial mismatch occurred when the objects orientations were not appropriate for the goal-directed movement that had to be carried out for the action to succeed. A functional mismatch occurred when no action effect was associated with the combination of the particular objects. The results of nine experiments show that (1) functional information and information about the goal-directed movement is initially processed separately but becomes integrated into one coherent representation at a later stage. (2) The processes that derive both kinds of information run in parallel during action perception and (3) interact to some extent. In particular, knowledge about the function of the objects what goal can be achieved by the particular combination of objects provides a context for the understanding of the goal-directed movements that are carried out. These results generalize to three different action domains (grasping actions, inserting actions, and action of tool use).