We are developing a new type of bipolar recording electrode intended for implantation within individual fascicles of mammalian peripheral nerves. In the experiments reported here we used electrodes fabricated from 25 microns diameter Pt wire, 50 microns 90% Pt-10% Ir wire and 7 microns carbon fibers. The electrodes were implanted in the sciatic nerves of rats and in the ulnar nerves of cats. The signal-to-noise ratio of recorded activity induced by nonnoxious mechanical stimulation of the skin and joints was studied as a function of the type of electrode material used, the amount of insulation removed from the recording zone, and the longitudinal separation of the recording zones of bipolar electrode pairs. Both acute and short term (two day) chronic experiments were performed. The results indicate that a bipolar electrode made from Teflon-insulated, 25 microns diameter, 90% Pt-10% Ir wire, having a 1-2 mm long recording zone, can be used for recording of peripheral nerve activity when implanted with one wire inside the fascicle and the other lead level with the first lead, but outside the fascicle. No insulating cuff needs to be placed around the nerve trunk.