The squid giant axon was used as a model system in which to determine the independent contributions of membrane excitability and diameter changes to threshold parameters and propagation of action potentials in inhomogeneous regions. The membrane excitability of a segment of an axon was altered by changes in the bathing solution, while its effective electrical diameter was increased by the insertion of a low-resistance axial wire. In computer simulations of these experiments, similar alterations were made in the membrane's conductance and axon's diameter. The inflexions in the shapes of action potentials propagating into a region with abrupt decreases in axial resistance become more pronounced when the interval between impulses was shortened. At short intervals, propagation of the second impulse failed. In contrast, reduction of membrane excitability produced inflexion-free changes in action potential shape and allowed a close-following second impulse to pass through the inhomogeneity. A combined decrease in membrane excitability and increase in diameter of the same region exaggerated the changes in action potential shape characteristic of the diameter increase alone. Threshold parameters were obtained from 'strength-duration' excitability relationships measured by injection of current at different points along the axon. When only the membrane excitability was reduced, threshold characteristics changed smoothly from one region of the nerve to another. In contrast, lowering the internal resistance or increasing the diameter in one region of a nerve lowered the time constant of excitation and the threshold for brief (relative to rheobasic) current stimuli in the small-diameter region near the transition while raising them in the larger-diameter region.