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Fiducial markers are reference points used in the registration of image space(s) with physical (patient) space. As applied to interactive, image-guided surgery, the registration of image space with physical space allows the current location of a surgical tool to be indicated on a computer display of patient-specific preoperative images. This intrasurgical guidance information is particularly valuable in surgery within the brain, where visual feedback is limited. The accuracy of the mapping between physical and image space depends upon the accuracy with which the fiducial markers were located in each coordinate system. To effect accurate space registration for interactive, image-guided neurosurgery, the use of permanent fiducial markers implanted into the surface of the skull is proposed in this paper. These small cylindrical markers are composed of materials that make them visible in the image sets. The challenge lies in locating the subcutaneous markers in physical space. This paper presents an ultrasonic technique for transcutaneously detecting the location of these markers. The technique incorporates an algorithm based on detection of characteristic properties of the reflected A-mode ultrasonic waveform. The results demonstrate that ultrasound is an appropriate technique for accurate transcutaneous marker localization. The companion paper to this article describes an automatic, enhanced implementation of the marker-localization theory described in this article.