In this study, we determined the influence of dipole orientation, dipole location, and number of recording sites on the precision of dipole localization in a spherical volume conductor. We compared localization from referential EEG (R-EEG), scalp current density EEG (SCD-EEG) and magnetoencephalography (MEG). Dipole orientation had a small influence on the precision of dipole localization for R-EEG and SCD-EEG. Dipole location relative to the recording sites, dipole depth, and number of recording channels strongly influenced the precision of dipole localization. Assuming equal signal to noise conditions for each recording method, MEG and SCD-EEG had a similar precision for dipole localization of a single tangential dipole source and both methods were more precise than R-EEG. However, SCD-EEG was inferior to MEG for distinguishing a single tangential current source from a pair of deeper radial current sources. In summary, these results suggest that the MEG will be most useful for localization of multiple simultaneous dipole sources.