ABSTRACT: Advances in microfabrication technology have enabled the production of devices containing arrays of thousands of closely spaced recording electrodes, which afford subcellular resolution of electrical signals in neurons and neuronal networks. Rationalizing the electrode size and configuration in such arrays demands consideration of application-specific requirements and inherent features of the electrodes. Tradeoffs among size, spatial density, sensitivity, noise, attenuation, and other factors are inevitable. Although recording extracellular signals from neurons with planar metal electrodes is fairly well established, the effects of the electrode characteristics on the quality and utility of recorded signals, especially for small, densely packed electrodes, have yet to be fully characterized. Here, we present a combined experimental and computational approach to elucidating how electrode size, and size-dependent parameters, such as impedance, baseline noise, and transmission characteristics, influence recorded neuronal signals. Using arrays containing platinum electrodes of different sizes, we experimentally evaluated the electrode performance in the recording of local field potentials (LFPs) and extracellular action potentials (EAPs) from the following cell preparations: acute brain slices, dissociated cell cultures, and organotypic slice cultures. Moreover, we simulated the potential spatial decay of point-current sources to investigate signal averaging using known signal sources. We demonstrated that the noise and signal attenuation depend more on the electrode impedance than on electrode size, per se, especially for electrodes <10 μm in width or diameter to achieve high-spatial-resolution readout. By minimizing electrode impedance of small electrodes (<10 μm) via surface modification, we could maximize the signal-to-noise ratio to electrically visualize the propagation of axonal EAPs and to isolate single-unit spikes. Due to the large amplitude of LFP signals, recording quality was high and nearly independent of electrode size. These findings should be of value in configuring in vitro and in vivo microelectrode arrays for extracellular recordings with high spatial resolution in various applications.