Many studies have reported a musical advantage in perceiving lexical tones among non-native listeners, but it is unclear whether this advantage also applies to native listeners, who are likely to show ceiling-like performance and thus mask any potential musical advantage. The ongoing tone merging phenomenon in Hong Kong Cantonese provides a unique opportunity to investigate this as merging tone pairs are reported to be difficult to differentiate even among native listeners. In the present study, native Cantonese musicians and non-musicians were compared based on discrimination and identification of merging Cantonese tone pairs to determine whether a musical advantage in perception will be observed, and if so, whether this is seen on the phonetic and/or phonological level. The tonal space of the subjects' lexical tone production was also compared. Results indicated that the musicians outperformed the non-musicians on the two perceptual tasks, as indexed by a higher accuracy and faster reaction time, particularly on the most difficult tone pair. In the production task, however, there was no group difference in various indices of tonal space. Taken together, musical experience appears to facilitate native listeners' perception, but not production, of lexical tones, which partially supports a music-to-language transfer effect.