Extracellular multi-unit recording is a widely used technique to study spontaneous and evoked neuronal activity in awake behaving animals. These recordings are done using either single-wire or multiwire electrodes such as tetrodes. In this study we have tested the ability of single-wire electrodes to discriminate activity from multiple neurons under conditions of varying noise and neuronal cell density. Using extracellular single-unit recording, coupled with iontophoresis to drive cell activity across a wide dynamic range, we studied spike waveform variability, and explored systematic differences in single-unit spike waveform within and between brain regions as well as the influence of signal-to-noise ratio (SNR) on the similarity of spike waveforms. We also modelled spike misclassification for a range of cell densities based on neuronal recordings obtained at different SNRs. Modelling predictions were confirmed by classifying spike waveforms from multiple cells with various SNRs using a leading commercial spike-sorting system. Our results show that for single-wire recordings, multiple units can only be reliably distinguished under conditions of high recording SNR (≥ 4) and low neuronal density (≈ 20,000/ mm(3)). Physiological and behavioural changes, as well as technical limitations typical of awake animal preparations, reduce the accuracy of single-channel spike classification, resulting in serious classification errors. For SNR <4, the probability of misclassifying spikes approaches 100% in many cases. Our results suggest that in studies where the SNR is low or neuronal density is high, separation of distinct units needs to be evaluated with great caution.