In patients with carpal tunnel syndrome, low action potential amplitude after stimulation at the wrist (proximal to the lesion) is due to either demyelination or axonal degeneration. Demyelination can be distinguished from axonal degeneration by the presence of amplitude drop across the lesion. Amplitude drop is determined by comparison of action potential amplitude evoked by stimulation at the palm (distal to the lesion) with that of the wrist. Of 59 consecutive CTS patient hands, 36 (61%) showed significant reduction in CMAP and/or antidromic SNAP amplitudes at the wrist compared to the palm, indicating the presence of focal demyelination resulting in conduction block vs. pathologic dispersion with phase cancellation. Moreover, the smaller the wrist-evoked action potential amplitude, the greater the amplitude drop across the lesion. We conclude that in patients with CTS, as in other entrapment neuropathies, stimulation both proximal and distal to the lesion provides important pathophysiological information about the median nerve lesion.