Heterogeneity of electrical conductivity is a new mechanism by which excitable tissues can be stimulated via applied electric fields. Stimulation of axons crossing internal boundaries can arise at those boundaries where the electric conductivity of the volume conductor changes abruptly. The effectiveness of this and other stimulation mechanisms was compared in the context of transcranial magnetic stimulation. While, for a given stimulation intensity, the largest membrane depolarization occurred where an axon terminates or bends sharply in a high electric field region, a slightly smaller membrane depolarization, still sufficient to generate action potentials, also occurred at an internal boundary simulating a white matter-grey matter interface. Tissue heterogeneity can also give rise to local electric field gradients that are considerably stronger and more focal than those impressed by the stimulation coil. Tissue heterogeneity may play an important role in electric and magnetic "far field" stimulation.