Surgery of lesions within or close to the central area of the brain always carries the risk of iatrogenic motor or sensory deficits. Functional localization by means of intraoperative direct stimulation of the motor area or by recording somatosensory evoked potentials (SSEP's) from the surface of the somatosensory cortex is believed to reduce the operative risk. The authors introduce the combination of dipole source analysis of scalp-recorded SSEP's with three-dimensional (3-D) magnetic resonance (MR) imaging as a tool for preoperative localization of the central sulcus. This provides information on both functional and structural localization for preoperative planning. Four repeated measurements of right and left median nerve SSEP's were obtained from 20 subjects. Dipole source analysis showed a retest reliability of the 3-D localization error of 2.9 +/- 2.0 mm. Compared to the MR evaluation, dipole source analysis was found to mark the central sulcus within 3 mm for 15 conditions (subjects x side of stimulation), while the 3-D MR measurement was accurate to within 6 mm for 10 conditions and 9 mm for 14 conditions. Dipole locations were confirmed in six patients who underwent surgery of the central region. With respect to this application, dipole source analysis combined with 3-D MR imaging appears to be a valuable tool for preoperative functional localization. The accuracy in localization will be further improved when realistic head models become available that can take into account individual head geometry. Further development of the proposed new method holds promise that evoked potentials and electroencephalography will gain greater use in presurgical functional localization.