A dynamic model of the neuron-electrode interface is presented which is based on the interface geometry and the electrical properties of the neuronal membrane. The model is used to compute the potential at the electrode and the local membrane potentials. Extracellular as well as intracellular current stimulation can be simulated. The results demonstrate that extracellular recorded action potentials with several shapes and amplitudes can be produced, depending on the properties of the interface and the membrane. With homogeneous membrane properties, only small amplitudes are simulated, High amplitudes are produced with decreased concentration of voltage sensitive channels in the lower membrane. Resemblance of the shape of the intracellular potential is accomplished by decreasing the capacity of the lower membran