The interpretation of long-offset transient electromagnetic (LOTEM) data is usually based on layered earth models. Effects of lateral conductivity variations are commonly explained qualitatively, because three-dimensional (3-D) numerical modeling is not readily available for complex geology. One of the first quantitative 3-D interpretations of LOTEM data is carried out using measurements from the Munsterland basin in northern Germany. In this survey area, four data sets show effects of lateral variations including a sign reversal in the measured voltage curve at one site. This sign reversal is a clear indicator of two-dimensional (2-D) or 3-D conductivity structure, and can be caused by current channeling in a near-surface conductive body.Our interpretation strategy involves three different 3-D forward modeling programs. A thin-sheet integral equation modeling routine used with inversion gives a first guess about the location and strike of the anomaly. A volume integral equation program allows models that may be considered possible geological explanations for the conductivity anomaly. A new finite-difference algorithm permits modeling of much more complex conductivity structures for simulating a realistic geological situation. The final model has the zone of anomalous conductivity aligned below a creek system at the surface. Since the creeks flow along weak zones in this area, the interpretation seems geologically reasonable. The interpreted model also yields a good fit to the data.