Contrary to our rich phenomenological visual experience, our visual short-term memory system can maintain representations of only three to four objects at any given moment. For over a century, the capacity of visual memory has been shown to vary substantially across individuals, ranging from 1.5 to about 5 objects. Although numerous studies have recently begun to characterize the neural substrates of visual memory processes, a neurophysiological index of storage capacity limitations has not yet been established. Here, we provide electrophysiological evidence for lateralized activity in humans that reflects the encoding and maintenance of items in visual memory. The amplitude of this activity is strongly modulated by the number of objects being held in the memory at the time, but approaches a limit asymptotically for arrays that meet or exceed storage capacity. Indeed, the precise limit is determined by each individual's memory capacity, such that the activity from low-capacity individuals reaches this plateau much sooner than that from high-capacity individuals. Consequently, this measure provides a strong neurophysiological predictor of an individual's capacity, allowing the demonstration of a direct relationship between neural activity and memory capacity.