Advances in computer technology offer increased capabilities for ambulatory EEG monitoring. The technical specifications of currently available ambulatory EEG machines reasonably approximate inpatient EEG equipment. However, the evolution of ambulatory EEG from 3-channel analog cassette recordings to reformatable 32-channel digital devices with computer-assisted spike and seizure detection raises several unresolved issues. Should patients with nondiagnostic routine EEG receive ambulatory EEG? Is ambulatory EEG as accurate for patients with unclear clinical diagnoses as inpatient video-EEG monitoring? If the diagnostic yield of ambulatory EEG is less than inpatient monitoring, do outpatient savings still make the technique cost-effective? This article reviews the development of ambulatory EEG and the investigations of its clinical utility. An evidence-based analysis explores the benefits and limitations of ambulatory EEG, and offers aspects of its use which require additional clinical research.