A major goal in neuroscience is the development of optical reporters of membrane potential that are easy to use, have limited phototoxicity, and achieve the speed and sensitivity necessary for detection of individual action potentials in single neurons. Here we present a novel, two-component optical approach that attains these goals. By combining DiO, a fluorescent neuronal tracer dye, with dipicrylamine (DPA), a molecule whose membrane partitioning is voltage-sensitive, optical signals related to changes in membrane potential based on FRET (Förster resonance energy transfer) are reported. Using DiO/DPA in HEK-293 cells with diffraction-limited laser spot illumination, depolarization-induced fluorescence changes of 56% per 100 mV (tau approximately 0.1 ms) were obtained, while in neuronal cultures and brain slices, action potentials (APs) generated a Delta F/F per 100 mV of >25%. The high sensitivity provided by DiO/DPA enabled the detection of subthreshold activity and high-frequency APs in single trials from somatic, axonal, or dendritic membrane compartments. Recognizing that DPA can depress excitability, we assayed the amplitude and duration of single APs, burst properties, and spontaneous firing in neurons of primary cultures and brain slices and found that they are undetectably altered by up to 2 microm DPA and only slightly perturbed by 5 microm DPA. These findings substantiate a simple, noninvasive method that relies on a neuronal tracer dye for monitoring electrical signal flow, and offers unique flexibility for the study of signaling within intact neuronal circuits.