A long-offset transient electromagnetic (LOTEM) survey was carried out on Merapi volcano, Indonesia, in 1998. LOTEM data have been recorded at 41 receiver locations which cover a 10 km W--E and a 15 km S--N profile. The signals were transmitted at four locations on the south, west, and north sides of Merapi. The data were interpreted with one-dimensional (1-D) inversions. In addition, two particular features were investigated with 3-D modeling. On the south flank the magnetic field data show strong 3-D distortions consistently over the profile which can only be explained by a conductive near-surface structure, like a fracture filled with conductive fluids. The simulation of topographic effects shows that the interpretation is not significantly affected. On both profiles the most striking feature is a conductive layer of 20 Ω m at depths of 500--1000 m below the surface and a thickness of 1--2 km. The cause of the increased conductivity may be different for the summit area, the intermediate zone, and at the flanks: Below the summit, in vicinity of the conduit, the decrease in resistivity is produced either by hydrothermal fluids, by partial melts or rocks altered by the hydrothermal system, or by a combination. In the intermediate zone between the conduit and the flanks, either alteration or hydrothermal fluids may be the source of the conductivity increase. Fluids seem to be the most likely cause for the conductive layer at the flanks and the west--east striking anomaly. From the resistivity of the conductive layer and the typical porosity of volcanic rock we estimate fluid resistivities of 0.2--1 Ω m.