Transient optical neural stimulation has previously been shown to elicit highly controlled, artifact-free potentials within the nervous system in a non-contact fashion without resulting in damage to tissue. This paper presents the physiologic validity of elicited nerve and muscle potentials from pulsed laser induced stimulation of the peripheral nerve in a comparative study with the standard method of electrically evoked potentials. Herein, the fundamental physical properties underlying the two techniques are contrasted. Key laser parameters for efficient optical stimulation of the peripheral nerve are detailed. Strength response curves are shown to be linear for each stimulation modality, although fewer axons can be recruited with optically evoked potentials. Results compare the relative transient energy requirements for stimulation using each technique and demonstrate that optical methods result in highly selective functional nerve stimulation. Adjacent stimulation and recording of compound nerve potentials in their entirety from optical and electrical stimulation are presented, with optical responses shown to be free of any stimulation artifact. Thus, use of a pulsed laser exhibits distinct advantages when compared to standard electrical means for excitation of muscle potentials in the peripheral nerve in the research domain and possibly for clinical diagnostics in the future.