Despite improvements in anatomic imaging of the basal ganglia, microelectrode recording is still an invaluable tool in locating appropriate targets for neurosurgical intervention. These recording also provide an unparalleled opportunity to study the pathophysiological aspects of diseases. This article reviews the principles of microelectrode recording in functional neurosurgery and discusses the pathologic neurophysiologic findings commonly encountered. It also highlights some of the potential mechanisms of action of both dopaminergic drugs and deep brain stimulation. In addition we review the recent work on pedunculopontine nucleus neurophysiology and trials of deep brain stimulation in that region for gait disturbances in Parkinson's disease.