In this study, two related issues were addressed: first, whether the P3 component of auditory evoked responses, obtained in the context of an oddball paradigm, and its magnetoencephalographically recorded counterpart (P3m) are generated by the same intracranial sources; and, second, whether these sources, modeled as equivalent current dipoles, can be localized in particular brain structures using magnetic resonance imaging. The study involving 8 normal adult subjects resulted in the following findings. (1) Both the similarities and differences in wave form characteristics of the simultaneously recorded P3 and P3m can be best accounted for by common intracranial sources. (2) Several successively activated single-dipolar sources, rather than a single source, account for the entire evolution of the P3m component. (3) Most of these sources were localized in the vicinity of the auditory cortex in all subjects, although some sources appeared to be in deeper structures, possibly the lateral thalamus. (4) The successive activation of sources followed an orderly medial-to-lateral course. These results suggest that activity responsible for the surface-recorded P3 (and P3m) component may be initiated in deep structures, but it quickly spreads over and is sustained in areas near the auditory cortex.