A shielded electrode assembly for nerve sensing is disclosed. The electrode assembly is a flexible and generally tubular structure that can be wrapped around and secured to the outer surface of a nerve so as to establish and maintain electrical contact therewith. The assembly includes an electrically conductive shield with conductive reference electrodes positioned at opposite ends thereof to define an isopotential reference. A sense electrode is placed within the isopotential reference and senses signals either with respect to the isopotential reference or to a sense reference electrode also positioned within the isopotential reference to a sensing device. The isopotential reference provides a region along which nerve activity propagating along the nerve can be sensed with a large attenuation of any external noise which may be present adjacent the sensing region of the nerve. The shielded electrode assembly facilitates direct, long-term nerve sensing with reduced need for filtering or signal processing.