Transcranial magnetic stimulation (TMS) can non-invasively modulate neural activity in humans. Despite three decades of research, the spatial extent of the cortical area activated by TMS is still controversial. Moreover, how TMS interacts with task-related activity during motor behavior is unknown. Here, we applied single-pulse TMS over macaque parietal cortex while recording single-unit activity at various distances from the center of stimulation during grasping. The spatial extent of TMS-induced activation is remarkably restricted, affecting the spiking activity of single neurons in an area of cortex measuring less than 2 mm in diameter. In task-related neurons, TMS evokes a transient excitation followed by reduced activity, paralleled by a significantly longer grasping time. Furthermore, TMS-induced activity and task-related activity do not summate in single neurons. These results furnish crucial experimental evidence for the neural effects of TMS at the single-cell level and uncover the neural underpinnings of behavioral effects of TMS.