A new description of evoked potential activity in terms of 'dipole source potentials' is presented, based on the physical laws relating intracranial electrical activity and scalp potentials. Recorded at a sufficiently distant electrode, the electrical activity of a spatially restricted region can be approximated uniquely by a time varying dipole vector field with stationary equivalent dipole location. Each of its 3 projections on a 3-dimensional coordinate system presents an accordingly defined 'dipole source component.' Magnitudes of these components are functions of time, named 'dipole source potentials.' The 2-dimensional coronal scalp distribution of middle and late AEPs, obtained in 15 normal subjects, could best be decomposed into tangential and radial dipole source components, originating from the auditory structures in both temporal lobes. Initial tangential activity (N19t-P30t) appeared to arise in primary auditory cortex, and initial radial activity (N27r-P39r) in secondary auditory cortex, in view of the similarity with intracranial records (Celesia 1976). Unilateral lesions of the acoustic radiation abolished ipsilateral MAEP dipole source potentials. Lesions involving AI/II and AAI also abolished the LAEP source potentials in the damaged hemisphere. The normal dipole source potentials in the intact hemisphere fully explained scalp distributions in these patients. In cases with assumed interruption of primary cortical input, presence of late dipole source potentials, which were delayed by 20-30 msec, probably reflected cortical activation via commissural fibres.