We examined the influence of local tissue conductivity changes in the vicinity of a dipolar source on the neuromagnetic field and the electric scalp potential using a high resolution finite element method model of the human head. We found that the topology of both the electric scalp potential and the neuromagnetic field (and consequently dipole localization) is influenced significantly by conductivity changes only in voxels adjacent to the source. Conductivity changes in these voxels yield a greater change in the amplitude of the magnetic field (and consequently in the dipole strength) than in the amplitude of the electric potential.