It has been proposed that tinnitus is generated by aberrant neural activity that develops among neurons in tonotopic of regions of primary auditory cortex (A1) affected by hearing loss, which is also the frequency region where tinnitus percepts localize (Eggermont and Roberts 2004; Roberts et al., 2010, 2013). These models suggest (1) that differences between tinnitus and control groups of similar age and audiometric function should depend on whether A1 is probed in tinnitus frequency region (TFR) or below it, and (2) that brain responses evoked from A1 should track changes in the tinnitus percept when residual inhibition (RI) is induced by forward masking. We tested these predictions by measuring (128-channel EEG) the sound-evoked 40-Hz auditory steady-state response (ASSR) known to localize tonotopically to neural sources in A1. For comparison the N1 transient response localizing to distributed neural sources in nonprimary cortex (A2) was also studied. When tested under baseline conditions where tinnitus subjects would have heard their tinnitus, ASSR responses were larger in a tinnitus group than in controls when evoked by 500 Hz probes while the reverse was true for tinnitus and control groups tested with 5 kHz probes, confirming frequency-dependent group differences in this measure. On subsequent trials where RI was induced by masking (narrow band noise centered at 5 kHz), ASSR amplitude increased in the tinnitus group probed at 5 kHz but not in the tinnitus group probed at 500 Hz. When collapsed into a single sample tinnitus subjects reporting comparatively greater RI depth and duration showed comparatively larger ASSR increases after masking regardless of probe frequency. Effects of masking on ASSR amplitude in the control groups were completely reversed from those in the tinnitus groups, with no change seen to 5 kHz probes but ASSR increases to 500 Hz probes even though the masking sound contained no energy at 500 Hz (an "off-frequency" masking effect). In contrast to these findings for the ASSR, N1 amplitude was larger in tinnitus than control groups at both probe frequencies under baseline conditions, decreased after masking in all conditions, and did not relate to RI. These results suggest that aberrant neural activity occurring in the TFR of A1 underlies tinnitus and its modulation during RI. They indicate further that while neural changes occur in A2 in tinnitus, these changes do not reflect the tinnitus percept. Models for tinnitus and forward masking are described that integrate these findings within a common framework.