High-frequency potential oscillations in the range of 300-900 Hz have recently been shown to concur with the primary response (N20) of the somatosensory cortex in awake humans. However, the physiological mechanisms of the high-frequency oscillations remained undetermined. We addressed the issue by analyzing magnetic fields during wakefulness and sleep over the left hemisphere to right median nerve stimulation with a wide bandpass (0.1-2000 Hz) recording with subsequent high-pass (> 300 Hz) and low-pass (< 300 Hz) filtering. With wide bandpass recordings, high-frequency magnetic oscillations with the main signal energy at 580-780 Hz were superimposed on the N20m during wakefulness. Isofield mapping at each peak of the high-pass filtered and isolated high-frequency oscillations showed a dipolar pattern and the estimated source for these peaks was the primary somatosensory cortex (area 3b) very close to that for the N20m peak. During sleep, the high-frequency oscillations showed dramatic diminution in amplitude while the N20m amplitude exhibited a moderate increment. This reciprocal relation between the high-frequency oscillations and the N20m during a wake-sleep cycle suggests that they represent different generator substrates. We speculate that the high-frequency oscillations represent a localized activity of the GABAergic inhibitory interneurons of layer 4, which have been shown in animal experiments to respond monosynaptically to thalamo-cortical input with a high-frequency (600-900 Hz) burst of short duration spikes. On the other hand, the underlying N20m represents activity of pyramidal neurons which receive monosynaptic excitatory input from the thalamus as well as a feed-forward inhibition from the interneurons.