The process of action potential production is analyzed in relation to the problem of energy transduction in the nerve. Describing the conditions required for the maintenance of excitability, the indispensability of divalent cations and the dispensability of univalent cations in the external medium are emphasized. Univalent cations with a strong tendency toward hydration enhance the action potential amplitude when added to the external Ca-salt solution. Experimental facts are described in consonance with the macromolecular interpretation of nerve excitation which postulates a transition of the negatively charged membrane macromolecules from a hydrophobic (resting) state to a hydrophilic (excited) state. Thermodynamic implications are discussed in relation to changes in enthalpy and volume accompanied by action potential production. Difficulties associated with analyses of excitation processes on a molecular basis are stressed.