Phantom auditory perception--tinnitus--is a symptom of many pathologies. Although there are a number of theories postulating certain mechanisms of its generation, none have been proven yet. This paper analyses the phenomenon of tinnitus from the point of view of general neurophysiology. Existing theories and their extrapolation are presented, together with some new potential mechanisms of tinnitus generation, encompassing the involvement of calcium and calcium channels in cochlear function, with implications for malfunction and aging of the auditory and vestibular systems. It is hypothesized that most tinnitus results from the perception of abnormal activity, defined as activity which cannot be induced by any combination of external sounds. Moreover, it is hypothesized that signal recognition and classification circuits, working on holographic or neuronal network-like representation, are involved in the perception of tinnitus and are subject to plastic modification. Furthermore, it is proposed that all levels of the nervous system, to varying degrees, are involved in tinnitus manifestation. These concepts are used to unravel the inexplicable, unique features of tinnitus and its masking. Some clinical implications of these theories are suggested.