System of correcting misspelled words in input text detects a misspelled word in the input text, determines a list of alternative words for the misspelled word, and ranks the list of alternative words based on a context of the input text. In certain embodiments, finite state machines (FSMs) are utilized in the spelling and grammar correction process, storing one or more lexicon FSMs, each of which represents a set of correctly spelled reference words. Storing the lexicon as one or more FSMs facilitates those embodiments of the invention employing a clinet-server architecture. The input text to be corrected may also be encoded as a FSM, which includes alternative word(s) for word(s) in need of correction along with associated weights. The invention adjusts the weights by taking into account the grammatical context in which the word appears in the input text. In certain embodiments the modification is performed by applying a second FSM to the FSM that was generated for the input text, where the second FSM encodes a grammatically correct sequence of words, thereby generating an additional FSM.