In the present study, we proposed a new subspace scanning algorithm to enhance the spatial resolution of electroencephalography (EEG) and magnetoencephalography(MEG) source localization. Subspace scanning algorithms, represented by the multiple signal classification (MUSIC) algorithm and the first principal vector (FINE) algorithm, have been widely used to localize asynchronous multiple dipolar sources in human cerebral cortex. The conventional MUSIC algorithm used principal component analysis (PCA) to extract the noise vector subspace, thereby having difficulty in discriminating two or more closely-spaced cortical sources. The FINE algorithm addressed the problem by using only a part of the noise vector subspace, but there was no golden rule to determine the number of noise vectors. In the present work, we estimated a non-orthogonal signal vector set using independent component analysis (ICA) instead of using PCA and performed the source scanning process in the signal vector subspace, not in the noise vector subspace. Realistic 2D and 3D computer simulations, which compared the spatial resolutions of various algorithms under different noise levels, showed that the proposed ICA-MUSIC algorithm has the highest spatial resolution, suggesting that it can be a useful tool for practical EEG/MEG source localization.