The deterioration of field potential (FP) recording quality and yield by in vivo multielectrode arrays (MEA) within days to weeks of implantation severely limits progress in basic and applied brain research. The prevailing hypothesis is that implantation of MEA platforms initiate and perpetuate inflammatory processes which culminate in the formation of scar tissue (the foreign body response, FBR) around the implant. The FBR leads to progressive degradation of the recording qualities by displacing neurons away from the electrode surfaces, increasing the resistance between neurons (current source) and the sensing pads and by reducing the neurons’ excitable membrane properties and functional synaptic connectivity through the release of pro-inflammatory cytokines. Meticulous attempts to causally relate the cellular composition, cell density, and electrical properties of the FBR have failed to unequivocally correlate the deterioration of recording quality with the histological severity of the FBR. Based on confocal and electron microscope analysis of thin sections of polyimide based MEA implants along with the surrounding brain tissue at different points in time after implantation, we propose that abrupt FP amplitude attenuation occurs at the implant/brain-parenchyma junction as a result of high seal resistance insulation formed by adhering microglia to the implant surfaces. In contrast to the prevailing hypothesis, that FP decrease occurs across the encapsulating scar of the implanted MEA, this mechanism potentially explains why no correlations have been found between the dimensions and density of the FBR and the recording quality. Recognizing that the seal resistance formed by adhering-microglia to the implant constitutes a downstream element undermining extracellular FP recordings, suggests that approaches to mitigate the formation of the insulating glial could lead to improved recording quality and yield.