We demonstrate that spatially accurate and selective stimulation is crucial when cortical functions are studied by the creation of temporary lesions with transcranial magnetic stimulation (TMS). Previously, the interpretation of the TMS results has been hampered by inaccurate knowledge of the site and strength of the induced electric current in the brain. With a Navigated Brain Stimulation (NBS) system, which provides real-time magnetic resonance image (MRI)-guided targeting of the TMS-induced electric field, we found that TMS of a spatially restricted cortical S1 thenar area is sufficient to abolish sensation from a weak electric stimulation of the corresponding skin area. We demonstrate that with real-time navigation, TMS can be repeatably directed at millimeter-level precision to a target area defined on the MRI. The stimulation effect was temporally and spatially specific: the greatest inhibition of sensation occurred when TMS was applied 20 ms after the cutaneous test stimulus and the TMS effect was sensitive to 8-13 mm displacements of the induced electric field pattern. The results also indicate that TMS selectively to S1 is sufficient to abolish perception of cutaneous stimulation of the corresponding skin area.