We have investigated the 3D navigation accuracy of a frameless ultrasound-based neuronavigation system (SonoWand®) for surgical planning and intraoperative image guidance. In addition, we present a detailed description and review of the error sources associated with surgical neuronavigation based on preoperative MRI data and intraoperative ultrasound. A phantom with 27 precisely denned points was scanned with ultrasound by various translation and tilt movements of the ultrasound probe (180 3D scans in total), and the 27 image points in each volume were located using an automatic detection algorithm. These locations were compared to the physically measured locations of the same 27 points. The accuracy of the neuronavigation system and the effect of varying acquisition conditions were found through a thorough statistical analysis of the differences between the two point sets. The accuracy was found to be 1.40 ± 0.45 mm (arithmetic mean) for the ultrasound-based neuronavigation system in our laboratory setting. Improper probe calibration was the major contributor to this figure. Based on our extensive data set and thorough evaluation, the accuracy found in the laboratory setting is expected to be close to the overall clinical accuracy for ultrasound-based neuronavigation. Our analysis indicates that the overall clinical accuracy may be as low as 2 mm when using intraoperative imaging to compensate for brain shift.