The purpose of this study is to evaluate objectively the functional changes in the nervous system in hypothyroidism by different electrophysiological parameters and to determine the frequencies of these changes in patients with hypothyroidism. We enrolled 23 patients (17–64 years old, mean 38.2) with biochemical evidence of hypothyroidism, with thyroxine less than 4 μg/dl and thyrotropin above 4.5 mU/ml, and 200 age- and sex-matched normal subjects. Detailed clinical examination and electrophysiological measurements included electromyography, motor conduction velocity, visual-evoked potentials (VEPs), brainstem auditory-evoked potentials (BAEPs) and event-related potentials. Determinations of P300, Wechsler Adult Intelligence Scale (IQ) and electroencephalography (EEG) were performed. Of the hypothyroid patients 52% had peripheral nervous system (PNS) involvement. Entrapment neuropathy was the commonest (35%). Axonal neuropathy was recorded in 9% and myopathy was recorded in another 9%. The central nervous system (CNS) was affected in 78% of the cases. Significant prolongations of P100 latency of VEP, latency and interpeak latency of BAEPs of different waves of hypothyroid patients were compared to the control group. 52% had abnormal VEPs and BAEPs above the mean ± 2 SD of the normal control group. Six patients (26%) had prolonged P300 latency while 16 patients had an IQ below 90. Eight patients (35%) had EEG changes. Diffuse slowing of background activity was the commonest. No significant correlation was observed between hormonal levels and the different electrophysiological parameters. Thus, the CNS is more vulnerable to the effect of hypothyroidism than the PNS. Therefore, we suggest performing electrophysiological studies in hypothyroid patients, even in the asymptomatic ones, early in the course of disease in order to detect the nervous system involvement.