Psychologists and neuroscientists have had a long-standing interest in the P3, a prominent component of the event-related brain potential. This review aims to integrate knowledge regarding the neural basis of the P3 and to elucidate its functional role in information processing. The authors review evidence suggesting that the P3 reflects phasic activity of the neuromodulatory locus coeruleus-norepinephrine (LC-NE) system. They discuss the P3 literature in the light of empirical findings and a recent theory regarding the information-processing function of the LC-NE phasic response. The theoretical framework emerging from this research synthesis suggests that the P3 reflects the response of the LC-NE system to the outcome of internal decision-making processes and the consequent effects of noradrenergic potentiation of information processing. Copyright 2005 by the American Psychological Association.