1. The process of neural excitation in hair cell systems was studied in an in vitro preparation of the Xenopus laevis (African clawed toad) lateral line organ. A specially designed stimulus chamber was used to apply accurately controlled pressure, water movement, or electrical stimuli, and to record the neural responses of the two afferent fibers innervating each organ or stitch. The objective of the study was to determine the characteristics of the neural responses to these stimuli, and thus gain insight into the transduction process. 2. A sustained deflection of the hair cell cilia due to a constant flow of water past the capula resulted in a maintained change in the mean firing rate (MFR) of the afferent fibers. The data also demonstrated that the neural response was proportional to the velocity of the water flow and indicated that both deflection and movement of the cilia were the effective physiological stimuli for this hair cell system. 3. The preparations responded to sinusoidal water movements (past the capula) over the entire frequency range of the stimulus chamber, 0.1-130 Hz, and were most sensitive between 10 and 40 Hz. The variation of the MFR and the percent modulation indicated that the average dynamic range of each organ was 23.5 dB. 4. The thresholds, if any, for sustained pressure changes and for sinusoidal pressure variations in the absence of water movements were very high. Due to the limitations of the stimulus chamber it was not possible to generate pressure stimuli of sufficient magnitude to elicit a neural response without also generating suprathreshold water-movement stimuli. Sustained pressures had no detectable effect on the neural response to water-movement stimuli. 5. The preparations were very sensitive to electrical potentials applied across the toad skin on which the hair cells were located. Potentials which made the ciliated surfaces of the hair cells positive with respect to their bases increased the MFR of the fibers, whereas negative potentials decreased it. The responses to sinusoidal electrical stimuli were similar to responses to water-movement stimuli with respect to frequency and dynamic ranges. Thresholds as low as 100 muV peak to peak (p-p) for 16-Hz stimuli were found. 6. The characteristics of the neural responses to electrical stimulation as well as supporting data obtained from the studies of the effects of anoxia on the evoked responses indicate that the electrical stimulus acts on the hair cells or on the synapses, rather than directly on the nerve fibers. This finding suggests that receptor potentials or their associated currents play an important role in the process of neural excitation in hair cell systems.