Several experiments to determine the effects of two‐tone interaction in the cochlea are described. Nonlinear effects result when the cochlear partition is stimulated by a sinusoid whose frequency falls in a very narrow frequency band surrounding, but not including, the resonant frequency at the point under the recording electrode. These nonlinear effects are manifested as a negative shift in the dc potential accompanied by a partial or complete suppression of the cochlear microphonic potential to a second tone presented at the same time. This suppression is best seen in the first and second turns of the cochlea. Similar suppression effects accompanying a dc shift are obtained by artificially displacing the basilar membrane from its resting position by an asymmetrical change in hydrostatic pressure in the perilymph. The functional relations governing suppression were determined and the results compared with those obtained in two‐tone inhibition experiments in auditory nerve fibers. The results support the conclusion that inhibitory effects seen in nerve fibers, stimulated by two tones simultaneously, reflect mechanical events in the cochlear partition and subsequent changes in the effective stimulating waveform triggering the auditory nerve.