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The aim of this study was to examine the effect of dispersive tissue properties on the volume-conducted voltage waveforms and volume of tissue activated during deep brain stimulation. Inhomogeneous finite-element models were developed, incorporating a distributed dispersive electrode-tissue interface and encapsulation tissue of high and low conductivity, under both current-controlled and voltage-controlled stimulation. The models were used to assess the accuracy of capacitive models, where material properties were estimated at a single frequency, with respect to the full dispersive models. The effect of incorporating dispersion in the electrical conductivity and relative permittivity was found to depend on both the applied stimulus and the encapsulation tissue surrounding the electrode. Under current-controlled stimulation, and during voltage-controlled stimulation when the electrode was surrounded by high-resistivity encapsulation tissue, the dispersive material properties of the tissue were found to influence the voltage waveform in the tissue, indicated by RMS errors between the capacitive and dispersive models of 20%-38% at short pulse durations. When the dispersive model was approximated by a capacitive model, the accuracy of estimates of the volume of tissue activated was very sensitive to the frequency at which material properties were estimated. When material properties at 1 kHz were used, the error in the volume of tissue activated by capacitive approximations was reduced to -4.33% and 11.10%, respectively, for current-controlled and voltage-controlled stimulations, with higher errors observed when higher or lower frequencies were used.