This paper describes a method of generating a reduced phoneme set for dialogue-based computer assisted language learning (CALL)systems. We designed a reduced phoneme set consisting of classified phonemes more aligned with the learners’ speech characteristics than the canonical set of a target language. This reduced phoneme set provides an inherently more appropriate model for dealing with mispronunciation by second language speakers. In this study, we used a phonetic decision tree (PDT)-based top-down sequential splitting method to generate the reduced phoneme set and then applied this method to a translation-game type English CALL system for Japanese to determine its effectiveness. Experimental results showed that the proposed method improves the performance of recognizing non-native speech.