The transduction process of a vertebrate hair cell commences with the application of mechanical stimuli to the hair bundle, a cluster microvillous stereocilia and single axonemal kinocilium. In an effort to determine where within the hair bundle transduction occurs, I have measured extracellular potentials around the hair bundles of mechanically stimulated hair cells from the bullfrog's sacculus. Stimulus-dependent signals up to 17 microV in peak-to-peak amplitude have been found. These appear to be due to the flow of transduction current on the basis of their amplitude, phase, dependence on stimulus size and orientation, proportionality to membrane potential, and sensitivity to an ototoxic antibiotic. The responses are consistently larger near the top of the hair bundle than at its base, suggesting that the transduction apparatus lies at or near the distal ends of the stereocilia.