This study presents an implantable microcontroller-based bi-directional transmission system with an inductive link designed for biological signal sensing. The system comprises an external module and an implantable module. The external module incorporates a high-efficiency class-E transceiver with amplitude modulation scheme and a data recovery reader. The transceiver sends both power and commands to the implanted module, while the reader recovers the recorded biological signal data and transmits the data to a personal computer (PC) for further data processing. To reduce the effects of interference induced by the 2 MHz carrier signal, the implanted module uses two separate coils to perform the necessary two-way data transmission. The outward backward telemetry circuitry of the implanted module was based on the loadshift keying (LSK) technique. The transmitted sensed signal had a 10-bit resolution and a read-out rate of 115 kbps. The implanted module, measuring 4.5 x 3 x 1.2 cm3, was successfully verified in animal experiment in which the electroneurogram (ENG) signal was recorded from the sciatic nerve of New Zealand rabbits in response to nociceptive stimulation of foot. The reliable operating distance of the system was within about 3.5 cm with an efficiency of around 25%. Our present study confirms that the proposed biological signal sensing device is suitable for various implanted applications following an appropriate biocompatible packaging procedure.