The combination of brain stimulation by transcranial magnetic stimulation (TMS) with simultaneous electroencephalographic (EEG) imaging has become feasible due to recent technical developments. The TMS-EEG integration provides real-time information on cortical reactivity and connectivity through the analysis of TMS-evoked potentials (TEPs), and how functional activity links to behavior through the study of TMS-induced modulations thereof. It reveals how these effects vary as a function of neuronal state, differing between individuals and patient groups but also changing rapidly over time during task performance. This review discusses the wide range of possible TMS-EEG applications and what new information may be gained using this technique on the dynamics of brain functions, hierarchical organization, and cortical connectivity, as well as on TMS action per se. An advance in the understanding of these issues is timely and promises to have a substantial impact on many areas of clinical and basic neuroscience.