The study of localized failure under controlled conditions can be accomplished within a laboratory setting with the University of Minnesota plane-strain compression apparatus. The device provides an opportunity to observe shear faulting and to compare displacements from acoustic emission (AE) sources with global measurements. A biaxial compression test on a sandstone specimen was performed with monitoring of AE. The plane-strain test showed that the shear fault was not formed until after peak load. Compaction of the shear fault was observed from the axial and lateral measurements of displacement and the orientation of the failure plane. The AE events were modeled as displacement discontinuities. The complicated deconvolution process for the transducer transfer function was eliminated by using a simplified calibration procedure. The sources of the postpeak events were characterized as being caused predominantly by slip in the direction of the global failure plane, although components of displacement associated with closing were identified. To provide an order of magnitude estimate of the slip, the field observation of a 10-4 strain drop over the seismic area was assumed. The tangential displacement from 110 AE events was estimated to be 0.01 mm. During the same period of time, the displacement along the shear fault from global measurements was 0.03 mm.