Combined transcranial magnetic stimulation (TMS) and electroencephalography (EEG) can be used to analyze cortical reactivity and connectivity. However, the effects of corticospinal and peripheral muscle activity on TMS-evoked potentials (TEPs) are not well understood. The aim of this paper is to evaluate the relationship between cortico-spinal activity, in the form of peripheral motor-evoked potentials (MEPs), and the TEPs from motor areas, along with the connectivity among activated brain areas. TMS was applied to left and right motor cortex (M1), separately, at motor threshold while multi-channel EEG responses were recorded in 17 healthy human subjects. Cortical excitability and source imaging analysis were performed for all trials at each stimulation location, as well as comparing trials resulting in MEPs to those without. Connectivity analysis was also performed comparing trials resulting in MEPs to those without. Cortical excitability results significantly differed between the MEP and no-MEP conditions for left M1 TMS at 60 ms (CP1, CP3, C1) and for right M1 TMS at 54 ms (CP6, C6). Connectivity analysis revealed higher outflow and inflow between M1 and somatosensory cortex bi-directionally for trials with MEPs than those without for both left M1 TMS (at 60, 100, 164 ms) and right M1 TMS (at 54, 100, and 164 ms). Both TEP amplitudes and connectivity measures related to motor and somatosensory areas ipsilateral to the stimulation were shown to correspond with peripheral MEP amplitudes. This suggests that cortico-spinal activation, along with the resulting somatosensory feedback, affects the cortical activity and dynamics within motor areas reflected in the TEPs. The findings suggest that TMS-EEG, along with adaptive connectivity estimators, can be used to evaluate the cortical dynamics associated with sensorimotor integration and proprioceptive manipulation along with the influence of peripheral muscle feedback.