It is unclear what roles native language (L1) and second language (L2) play in the perception of lexical tones in a third language (L3). Listeners with different language backgrounds use different F0 cues in tonal perception. While English listeners use F0 height, Mandarin listeners rely more on F0 direction. The present study addresses whether knowledge of Mandarin as an L2 results in listeners’ reliance on F0 direction in their perception of L3 (Cantonese) tones. 15 English-speaking L2 learners of Mandarin were compared to 15 monolingual English speakers and 15 native Mandarin speakers as control groups. All groups discriminated Cantonese tones either by distinguishing a contour tone from a level tone or a level tone from another level tone. The L2 learners patterned differently from the control groups by using both F0 height and direction. Hence, L2 experience as well as L1 experience was found to modulate perception of L3 tones.