Several theoretical, computational, and experimental studies suggest that neurons encode sensory information using a small number of active neurons at any given point in time. This strategy, referred to as 'sparse coding', could possibly confer several advantages. First, it allows for increased storage capacity in associative memories; second, it makes the structure in natural signals explicit; third, it represents complex data in a way that is easier to read out at subsequent levels of processing; and fourth, it saves energy. Recent physiological recordings from sensory neurons have indicated that sparse coding could be a ubiquitous strategy employed in several different modalities across different organisms.