We present a theory and computational models to couple the electric field induced by magnetic stimulation to neuronal membranes. Based on the characteristics of magnetically induced electric fields and the modified cable equation that we developed previously, quasipotentials are derived as a simple and accurate approximation for coupling of the electric fields to neurons. The conventional and modified cable equations are used to simulate magnetic stimulation of long peripheral nerves by circular and figure-8 coils. Activation thresholds are obtained over a range of lateral and vertical coil positions for two nonlinear membrane models representing unmyelinated and myelinated straight axons and also for undulating myelinated axons. For unmyelinated straight axons, the thresholds obtained with the modified cable equation are significantly lower due to transverse polarization, and the spatial distributions of thresholds as a function of coil position differ significantly from predictions by the activating function. However, the activation thresholds of unmyelinated axons obtained with either cable equation are very high and beyond the output capabilities of conventional magnetic stimulators. For myelinated axons, threshold values are similar for both cable equations and within the range of magnetic stimulators. Whereas the transverse field contributes negligibly to the activation thresholds of myelinated fibers, axonal undulation can significantly increase or decrease thresholds depending on coil position. The analysis provides a rigorous theoretical foundation and implementation methods for the use of the cable equation to model neuronal response to magnetically induced electric fields. Experimentally observed stimulation with the electric fields perpendicular to the nerve trunk cannot be explained by transverse polarization and is likely due to nerve fiber undulation and other geometrical inhomogeneities.