A correlation dimension analysis of the AE index indicates that the magnetosphere behaves as a low-dimensional chaotic system with a dimension close to 4. Similar techniques are used to determine if the system's behavior is due to an intrinsic sensitivity to inital conditions and thus is truly chaotic. The quantity used to measure the sensitivity to initial conditions is the Lyapunov exponent. Its calculation for AL shows that it is nonzero (0.11¿0.05 min-1). This gives the exponential rate at which initially similar configurations of the magnetosphere evolve into completely different states. Also predictions of deterministic nonlinear models are expected to deviate from the observed behavior at the same rate. ¿American Geophysical Union 1991