Spoken dialogue systems are an active research field with wide applications. But the differences in the Chinese spoken dialogue system are not as distinct as that of English. In Chinese spoken dialogues, there are many language phenomena. Firstly, most utterances are ill-formed. Secondly, ellipsis, anaphora and negation are also widely used in Chinese spoken dialogue. Determining how to extract semantic information from incomplete sentences and resolve negation, anaphora and ellipsis is crucial. SHTQS ( Shanghai Transportation Query System) is an intelligent telephone-based spoken dialogue system providing information about the best route between any two sites in Shanghai. After a brief description of the system, the natural language processing is emphasized.Speech recognition sentences unavoidably contain errors. In language sequence processing procedures,these errors can be easily passed to the later parts and take on a ripple effect. To detect and recover these from errors as early as possible, language-processing strategies are specially considered. For errors resulting from divided words in speech recognition, segmentation and POS Tagging approaches that can rectify these errors are designed. Since most of the inquiry utterances are ill-formed and negation, anaphora and ellipsis are common language phenomena, the language understanding must be adequately adaptive. So, a partial syntactic parsing scheme is adopted and a chart algorithm is used. The parser is based on unification grammar. The semantic frame that extracts from the best arc set of the chart is used to represent the meaning of sentences. The negation, anaphora and ellipsis are also analyzed and corresponding processing approaches are presented. The accuracy of the language processing part is 88. 39% and the testing result shows that the language processing strategies are rational and effective.