The influence of interstitial or extracellular potentials on propagation usually has been ignored, often through assuming these potentials to be insignificantly different from zero, presumably because both measurements and calculations become much more complex when interstitial interactions are included. This study arose primarily from an interest in cardiac muscle, where it has been well established that substantial interstitial potentials occur in tightly packed structures, e.g., tens of millivolts within the ventricular wall. We analyzed the electrophysiological interaction between two adjacent unmyelinated fibers within a restricted extracellular space. Numerical evaluations made use of two linked core-conductor models and Hodgkin-Huxley membrane properties. Changes in transmembrane potentials induced in the second fiber ranged from nonexistent with large intervening volumes to large enough to initiate excitation when fibers were coupled by interstitial currents through a small interstitial space. With equal interstitial and intracellular longitudinal conductivities and close coupling, the interaction was large enough (induced Vm approximately 20 mV peak-to-peak) that action potentials from one fiber initiated excitation in the other, for the 40-microns radius evaluated. With close coupling but no change in structure, propagation velocity in the first fiber varied from 1.66 mm/ms (when both fibers were simultaneously stimulated) to 2.84 mm/ms (when the second fiber remained passive). Although normal propagation through interstitial interaction is unlikely, the magnitudes of the electrotonic interactions were large and may have a substantial modulating effect on function.