Inside the cochlea, sound-induced movement causes the stereocilia (hair cells) of the tectorial membrane to shear back and forth, resulting in depolarization. This signal is transmitted to a nerve lying under the organ of Corti, and is transmitted along the auditory nerve to the brainstem and synapses in the cochlear nucleus.

At the cochlear nucleus, auditory information is split into at least two streams:

1. As shown here, the ventral cochlear nucleus cells project to nuclei in the medulla called the superior olive.
2. The dorsal cochlear nucleus stream analyzes the quality of sound, sensitive to tiny frequency differences, and projects directly to the inferior colliculus, via the lateral lemniscus.

In the superior olive, the minute differences in the timing and loudness of the sound in each ear are compared, and from this the direction from which the sound came is determined.

Auditory information from the superior olive then projects up to the inferior colliculus via a fiber tract called the lateral lemniscus.

From the inferior colliculus, both streams of information proceed to the sensory thalamus. The auditory nucleus within the thalamus is the medial geniculate nucleus. The medial geniculate projects to primary auditory cortex, located within the temporal lobes.

Information has now arrived at the cortex. The primary auditory cortex (PAC) is located in the lateral fissure. Cells in the anterior portion of the PAC are more responsive to low frequency sound, with posterior cells responsive to low frequency sound. ERPs generated in auditory cortex during the latency range 20-200 msec reflect the encoding of a variety of acoustic features.

The secondary auditory cortex surrounds the PAC. While little is known about this area functionally, it has been shown to be activated more by increasingly complex auditory stimuli.

The N100 component is part of the N1-P2 complex. It's neural generators show otopic organization in supratemporal auditory cortex. The N1 shows additional sensitivity to virtual or perceived pitch derived from harmonics in complex tones or vowel sounds. ERPs in the N1 latency range, however, do not reflect the detailed encoding of stimulus features or of complex sound patterns.

The P200 component is the second part of the N1-P2 complex, and is also believed to be generated in the auditory cortex. The N1-P2 complex is considered to be exogenous (i.e. "sensory" or automatic)

The N200 occurs approximately 200 msec after the onset of an auditory stimulus, and has a source in the frontal lobes. It has been linked to endogenous (i.e. "cognitive" or controlled) processes such as stimulus discrimination and inhibition.

The P300 component is also endogenous in nature and has been shown to involve both the frontal and parietal lobes. This component is related to memory updating, and, accordingly, is larger to word stimuli that are subsequently remembered in study/free-recall situations.

The functional significance of the slow wave is unclear to date, but a sustained negative wave at this time has been linked generally to cortical excitation related to task response demands.