Contrast modulation affords independent control of static contrast (C) and changes in contrast (delta C). We found that in anesthetized, paralyzed cats, the visual evoked potential (VEP) was dependent only on magnitude of delta C at each pattern transition, and was independent of the starting or ending contrast level. Increasing modulation frequency to above 2 Hz reduced the VEP monotonically, implying that the time constant for differentiation by the VEP is of the order of 250 msec. The essentially perfect a.c. coupling suppresses standing contrast completely, permitting the full dynamic range of the VEP response system to be used for detection of contrast increments (which results in a decreasing Weber fraction). The difference between our results and those of behavioral studies using contrast modulation can be explained by eye movements present in the behavioral studies which refresh the retinal image of the static contrast in a way uncorrelated to temporal modulation of the stimulus, thus introducing a masking effect.