Optical scattering techniques have the potential to provide noninvasive measurements of neural activity with good spatial and temporal resolution. We used the lobster nerve as a model system to investigate and record event-related optical signals with a modulated light source and heterodyne detection system. We observed changes in the transmitted birefringent light intensity, corresponding with electrophysiological measurements of the action potential. The photon delay was below the detection threshold, in part due to the small size of the nerve bundle. Our system allowed us to place an upper bound on the magnitude of the phase change of 0.01 degrees. The physiological stability of the preparation allows comprehensive characterization of biological and instrumentation noise sources for testing optical measurement systems.