This article describes the use of auditory-evoked potentials (AEPs) as a tool to assess nonlinear processes in the auditory system. Two-tone signals were used as stimuli to obtain AEPs in both animal and human subjects. Frequency analysis of the physiologic waveforms revealed frequencies in the evoked potential that were not present in the acoustic signal. The largest distortion product in the evoked potential corresponded to the difference between the two primary frequencies (f2−f1). This distortion product was present in all subjects tested. Other distortion products at frequencies defined by n(f2−f1), where n<5, were also present in some individuals. These frequencies represent distortion components generated from an even-order nonlinear system. Extensive acoustic and electric calibration procedures provided substantial evidence that the distortion products recorded in the AEP were biologic in origin and not the result of acoustic or recording artifact.