The optimal stimulus position for a figure-8-shaped coil for magnetic stimulation of the ulnar nerve at the wrist was not coincident with the optimal electrical stimulus point but was shifted 18.3 mm to the ulnar side (P < 0.01). For the median nerve the optimal stimulus site was 9.6 mm radial to the optimal position for electrical stimulation (P < 0.05). This shift of the stimulus point for magnetic stimulation is significantly smaller after interposition of a homogenous electrically conducting medium between coil and arm but not changed after interposition of distilled water. This so-called boundary effect is therefore due to the different conductivities of the medium interposed between coil and nerve. It may also distort precise localisation of other excitable structures such as cranial nerves, nerve roots and cortical areas by means of magnetic stimuli. The amplitudes of the compound muscle action potentials elicited with identical magnetic stimulus strength were larger after the interposition of isotonic solution between coil and skin but not after interposition of distilled water. Consideration of the boundary effect provided an improved response amplitude to magnetic stimulation, but this could not adequately compensate for its poor localisation compared to electrical stimulation.