(1) Background: Postoperative nerve root injury with dysesthesia is the most frequent sequela following lumbar endoscopic transforaminal discectomy. At times, it may be accompanied by transient and rarely by permanent motor weakness. The authors hypothesized that direct compression of the exiting nerve root and its dorsal root ganglion (DRG) by manipulating the working cannula or endoscopic instruments may play a role. (2) Objective: To assess whether intraoperative neurophysiological monitoring can help prevent nerve root injury by identifying neurophysiological events during the initial placement of the endoscopic working cannula and the directly visualized video endoscopic procedure. (3) Methods: The authors performed a retrospective chart review of 65 (35 female and 30 male) patients who underwent transforaminal endoscopic decompression for failed non-operative treatment of lumbar disc herniation from 2012 to 2020. The patients’ age ranged from 22 to 86 years, with an average of 51.75 years. Patients in the experimental group (32 patients) had intraoperative neurophysiological monitoring recordings using sensory evoked (SSEP), and transcranial motor evoked potentials (TCEP), those in the control group (32 patients) did not. The SSEP and TCMEP data were analyzed and correlated to the postoperative course, including dysesthesia and clinical outcomes using modified Macnab criteria, Oswestry disability index (ODI), visual analog scale (VAS) for leg and back pain. (4) Results: The surgical levels were L4/L5 in 44.6%, L5/S1 in 23.1%, and L3/L4 in 9.2%. Of the 65 patients, 56.9% (37/65) had surgery on the left, 36.9% (24/65) on the right, and the remaining 6.2% (4/65) underwent bilateral decompression. Postoperative dysesthesia occurred in 2 patients in the experimental and six patients in the control group. In the experimental neuromonitoring group, there was electrodiagnostic evidence of compression of the exiting nerve root’s DRG in 24 (72.7%) of the 32 patients after initial transforaminal placement of the working cannula. A 5% or more decrease and a 50% or more decrease in amplitude of SSEPs and TCEPs recordings of the exiting nerve root were resolved by repositioning the working cannula or by pausing the root manipulation until recovery to baseline, which typically occurred within an average of 1.15 min. In 15 of the 24 patients with such latency and amplitude changes, a foraminoplasty was performed before advancing the endoscopic working cannula via the transforaminal approach into the neuroforamen to avoid an impeding nerve root injury and postoperative dysesthesia. (5) Conclusion: Neuromonitoring enabled the intraoperative diagnosis of DRG compression during the initial transforaminal placement of the endoscopic working cannula. Future studies with more statistical power will have to investigate whether employing neuromonitoring to avoid intraoperative compression of the exiting nerve root is predictive of lower postoperative dysesthesia rates in patients undergoing videoendoscopic transforaminal discectomy.