Transcranial magnetic stimulation (TMS) is a noninvasive technique used to stimulate the brain. This review will examine the fundamental principles of physics upon which magnetic stimulation is based, the design considerations of the TMS device, and hypotheses about its electrophysiological effects resulting in neuromodulation. TMS is valuable in neurophysiology research and has significant therapeutic potential in clinical neurology and psychiatry. While TMS can modify neuronal currents in the brain, its underlying mechanism remains unknown. Salient applications are included and some suggestions are outlined for future development of magnetic stimulators that could lead to more effective neuronal stimulation and therefore better therapeutic and diagnostic applications.