The driving performance of 15 subjects in a simulated road environment has been studied both with and without a hands-free telephone conversation. The performance indicators used were choice reaction time, braking profile, lateral position, speed, and situation awareness. The driving task was relatively easy, and the young drivers studies were able to have a hands-free telephone conversation and perform well with respect to lateral position, the variation in lateral position of the car, and speed maintenance. However, significant differences were found in choice reaction time, especially in the beginning stages of the telephone conversation, and in situation awareness. The subjects reacted significantly slower to an unexpected event in the first two minutes of the telephone conversation and were, for a large part of the telephone conversation, unaware of traffic movements around them.