An important feature of auditory scene analysis is the perceptual organization of sequential sound components, or 'auditory stream segregation'. Auditory stream segregation can be demonstrated by presenting a sequence of high and low frequency tones in an alternating pattern, ABAB. When the tone presentation rate (PR) is slow or the frequency separation (DeltaF) between the tones is small (<10%), a connected alternating sequence ABAB is perceived. When the PR is fast or the DeltaF is large, however, the alternating sequence perceptually splits into two parallel auditory streams, one composed of interrupted 'A' tones, and the other of interrupted 'B' tones. The neurophysiological basis of this perceptual phenomenon is unknown. Neural correlates of auditory stream segregation were examined in A1 of the awake monkey using neuronal ensemble techniques (multiunit activity and current source density). Responses evoked by alternating frequency sequences of tones, ABAB, were studied as a function of PR (5, 10, 20 and 40 Hz). 'A' tones corresponded to the best frequency (BF) of the cortical site, while 'B' tones were situated away from the BF by an amount DeltaF. At slow PRs, 'A' and 'B' tones evoked responses that generated an overall pattern of activity at the stimulus PR. In contrast, at fast PRs, 'B' tone responses were differentially suppressed, resulting in a pattern of activity consisting predominantly of 'A' tone responses at half the PR. The magnitude of 'B' tone response suppression increased with DeltaF. Differential suppression of BF and non-BF tone responses at high PRs can be explained by physiological principles of forward masking. The effect of DeltaF is explained by the hypothesis that responses to tones distant from the BF are more susceptible to suppression by BF tones than responses to tones near the BF. These results parallel human psychoacoustics of auditory stream segregation and suggest a cortical basis for the perceptual phenomenon.