We present a finite-element time-domain (FETD) approach for the simulation of 3D electromagnetic (EM) diffusion phenomena. The finite-element algorithm efficiently simulates transient electric fields and the time derivatives of magnetic fields in general anisotropic earth media excited by multiple arbitrarily configured electric dipoles with various signal waveforms. To compute transient electromagnetic fields, the electric field diffusion equation is transformed into a system of differential equations via Galerkin's method with homogeneous Dirichlet boundary conditions. To ensure numerical stability and an efficient time step, the system of the differential equations is discretized in time using an implicit backward Euler scheme. The resultant FETD matrix-vector equation is solved using a sparse direct solver along with a fill-in reduced ordering technique. When advancing the solution in time, the FETD algorithm adjusts the time step by examining whether or not the current step size can be doubled without unacceptably affecting the accuracy of the solution. To simulate a step-off source waveform, the 3D FETD algorithm also incorporates a 3D finite-element direct current (FEDC) algorithm that solves Poisson's equation using a secondary potential method for a general anisotropic earth model. Examples of controlled-source FETD simulations are compared with analytic and/or 3D finite-difference time-domain solutions and are used to confirm the accuracy and efficiency of the 3D FETD algorithm.