Under two-tone stimulation at frequencies f1 and f2 (f1<f2), the phase-locked response of a cochlear nerve fiber is composed predominantly of distortion-products (f2−f1) or (2f1−f2) when these distortion frequencies are near the characteristic frequency of the nerve fiber. We have concluded (H1) that the distortion-product is generated in a more basal region and propagated apically to the characteristic place of the distortion frequency. An alternative hypothesis (H2) postulates that the distortion-product is generated locally near the characteristic place of the distortion frequency, and that a “second filter” passes the distortion frequency but blocks frequencies f1 and f2. With f1=3680 Hz and f2=4000 Hz, at 50 dB SPL, we have found strong (f2−f1) from fibers with characteristic frequencies near 320 Hz. In noise-damaged cochleas [Siegel et al., Abs. No. B1], where histological and physiological examinations show damage in the basal region but no damage in the 320-Hz region, interpretation of the absence of the (f2−f1) response in accordance with H2 would require that (1) in normal cochleas, the stimulus frequencies f1 and f2 must propagate to the 320-Hz region; and (2) noise damage to the organ of Corti in the basal region must interfere with this propagation f1 and f2 to the 320-Hz region. Accepted theories of cochlear mechanics support the propagation of distortion-products as required by H1 but do not support the above two requirements needed for H2. [Work supported by NIH Grants NS07498, NS00162, RR00396, and NS07057.]