Recently many variants of electroencephalogramevoked responses have been studied as potential diagnostic aids in the detection and evaluation of hepatic encephalopathy. This study assesses the value of the auditory P300 event—related potential — a slow component of the auditory evoked response — as a tool in this field. Twenty-one nonencephalopathic and 12 encephalopathic (grade 1/2) cirrhotic patients and 26 controls were assessed clinically and psychometrically. Electroencephalogram spectral analysis and visual evoked response recordings were also conducted. An auditory P300 wave was elicited using the standard two-tone discrimination paradigm. The latency and amplitude of this wave were measured. The latency of the P300 was found to be significantly increased in the encephalopathic patients compared with both nonencephalopathic cirrhotic and control groups (p < 0.05). Amplitude of the wave was decreased in both nonencephalopathic and encephalopathic patients, but this was not statistically significant. This study suggests that the latency of the P300 is a good marker of grades 1 and 2 clinical hepatic encephalopathy. The delays in the P300 latency may indicate that encephalopathic patients have a deterioration of their stimulus evaluation abilities. (HEPATOLOGY 1990;12:688–694).