Musical expertise is associated with structural and functional changes in the brain that underlie facilitated auditory perception. We investigated whether the phase locking (PL) and amplitude modulations (AM) of neuronal oscillations in response to musical chords are correlated with musical expertise and whether they reflect the prototypicality of chords in Western tonal music. To this aim, we recorded magnetoencephalography (MEG) while musicians and non-musicians were presented with common prototypical major and minor chords, and with uncommon, non-prototypical dissonant and mistuned chords, while watching a silenced movie. We then analyzed the PL and AM of ongoing oscillations in the theta (4–8 Hz) alpha (8–14 Hz), beta- (14–30 Hz) and gamma- (30–80 Hz) bands to these chords. We found that musical expertise was associated with strengthened PL of ongoing oscillations to chords over a wide frequency range during the first 300 ms from stimulus onset, as opposed to increased alpha-band AM to chords over temporal MEG channels. In musicians, the gamma-band PL was strongest to non-prototypical compared to other chords, while in non-musicians PL was strongest to minor chords. In both musicians and non-musicians the long-latency (> 200 ms) gamma-band PL was also sensitive to chord identity, and particularly to the amplitude modulations (beats) of the dissonant chord. These findings suggest that musical expertise modulates oscillation PL to musical chords and that the strength of these modulations is dependent on chord prototypicality.