Intraoperative recordings obtained from electrodes placed on the scalp (vertex and earlobe or ear canal) in response to click stimulation were compared with recordings made directly from the auditory nerve in patients undergoing microvascular decompression (MVD) operations to relieve hemifacial spasm (HFS) and disabling positional vertigo (DPV). The results support earlier findings that show that the auditory nerve is the generator of both peak I and peak II in man, and that it is the intracranial portion of the auditory nerve that generates peak II. The results indicate that the second negative peak in the potentials recorded from the earlobe is generated by the auditory nerve where it passes through the porus acusticus into the skull cavity, and that the proximal portion of the intracranial portion of the auditory nerve generates a positive peak in the potentials that are recorded from the vertex. This peak appears with a latency that is slightly longer than that of the second negative peak in the potentials recorded from the earlobe (or ear canal). The second negative peak in the recording from the ear canal and the positive peak in the vertex recording contribute to peak II in the differentially recorded BAEP. Since our results indicate that the difference in the latency of the second negative peak in the recording from the earlobe and that of the positive peak in the vertex recording represents the neural travel time in the intracranial portion of the auditory nerve, this measure may be valuable in the differential diagnosis of eighth nerve disorders such as vascular compression syndrome.