Peripheral neuropathies, affect approximately 20 million people in the United States and are often a complication of conditions such as diabetes that can result in amputation of affected areas such as the feet and toes. In vitro methodologies to facilitate the understanding and treatment of these disorders often lack the cellular and functional complexity required to accurately model peripheral neuropathies. In particular, they are often 2-D and functional readouts, such as electrical activity, are limited to cell bodies thereby limiting the understanding of axonopathy which often characterizes these disorders. We have developed a functional 3-D model of peripheral nerves using a capillary alginate gel (Capgel™), as a scaffold. We hypothesize that: 1) The unique microcapillary structure of Capgel™ allows for the modeling of the 3-D microstructure of the peripheral nerve, and 2) That axon bundling in the capillary allows for the detection of axonal electrical activity. In our initial studies, we demonstrate that culturing embryonic dorsal root ganglia (DRG) within the Capgel™ environment allows for the separation of cell bodies from axons and recreates many of the features of an in vivo peripheral nerve fascicle including myelinated axons and the formation of a rudimentary perineurium. To develop functionality for this model we have integrated the DRG Capgel™ culture with a microelectrode array to examine spontaneous activity in axon bundles, which we find demonstrates superiority to other widely used 2-D models of the same tissue. Furthermore, by analyzing the activity on individual electrodes, we were able to record action potentials from multiple axons within the same bundle indicating a functional complexity comparable to that observed in fascicles in vivo. This 3D model of the peripheral nerve can be used to study the functional complexities of peripheral neuropathies and nerve regeneration as well as being utilized in the development of novel therapeutics