In this paper basic mathematical and physical concepts of the biomagnetic inverse problem are reviewed with some new approaches. The forward problem is discussed for both homogeneous and inhomogeneous media. Geselowitz' formulae and a surface integral equation are presented to handle a piecewise homogeneous conductor. The special cases of a spherically symmetric conductor and a horizontally layered medium are discussed in detail. The non-uniqueness of the solution of the magnetic inverse problem is discussed and the difficulty caused by the contribution of the electric potential to the magnetic field outside the conductor is studied. As practical methods of solving the inverse problem, a weighted least-squares search with confidence limits and the method of minimum norm estimate are discussed.