Local Field Potentials (LFPs) are population signals generated by complex spatiotemporal interaction of current sources and dipoles. Mathematical computations of LFPs allow the study of circuit functions and dysfunctions via simulations. This paper introduces LFPsim, a NEURON-based tool for computing population LFP activity and single neuron extracellular potentials. LFPsim was developed to be used on existing cable compartmental neuron and network models. Point source, line source, and RC based filter approximations can be used to compute extracellular activity. As a demonstration of efficient implementation, we showcase LFPs from mathematical models of electrotonically compact cerebellum granule neurons and morphologically complex neurons of the neocortical column. LFPsim reproduced neocortical LFP at 8, 32, and 56 Hz via current injection, in vitro post-synaptic N2a, N2b waves and in vivo T-C waves in cerebellum granular layer. LFPsim also includes a simulation of multi-electrode array of LFPs in network populations to aid computational inference between biophysical activity in neural networks and corresponding multi-unit activity resulting in extracellular and evoked LFP signals.