Moderate levels of acoustic fatigue, usually induced by a 100 dB SPL pure tone at a frequency appropriate to the location of intracochlear differential electrodes, have a surprising and paradoxical influence on the cochlear microphonic and the compound action potential of the auditory nerve. While the low-level microphonic becomes smaller, the low-level action potential becomes considerably larger and exhibits a shortened latency. The high-level microphonic and the high-level action potential are left virtually unchanged at these levels of fatigue. Nonetheless, if the duration or intensity of exposure is increased, both the high-level and low-level action potentials decrease as well. Assuming that the low-level microphonics are generated by outer hair cells, these data suggest that one relationship between outer hair cell function and neural function is inhibition at low intensities. Assuming that the high-level microphonic tends to be generated by inner hair cells, the decrease in the action potential at all intensities whenever the high-level microphonic potential is impaired suggests that the functional relationship between inner hair cells and auditory nerve function is excitatory.