The first derivative of induced electric field during magnetic stimulation, activating function, is calculated to study the influence of the interface between conductors with different conductivities on nerve excitation. A Neumann type boundary condition is derived for applying the finite element method to calculate the induced electric field. The spatial distributions of induced electric fields and activating functions in homogeneous and inhomogeneous volume conductors are calculated for comparison. The results show that the interface between conductors of different conductivities appears to markedly affect the nerve excitation elicited by magnetic stimulation.