Study of the foreign body reaction to implanted electrodes in the brain is an important area of research for the future development of neuroprostheses and experimental electrophysiology. After electrode implantation in the brain, microglial activation, reactive astrogliosis, and neuronal cell death create an environment immediately surrounding the electrode that is significantly altered from its homeostatic state. Objective. To uncover physiological changes potentially affecting device function and longevity, spatial transcriptomics (ST) was implemented to identify changes in gene expression driven by electrode implantation and compare this differential gene expression to traditional metrics of glial reactivity, neuronal loss, and electrophysiological recording quality. Approach. For these experiments, rats were chronically implanted with functional Michigan-style microelectrode arrays, from which electrophysiological recordings (multi-unit activity, local field potential) were taken over a six-week time course. Brain tissue cryosections surrounding each electrode were then mounted for ST processing. The tissue was immunolabeled for neurons and astrocytes, which provided both a spatial reference for ST and a quantitative measure of glial fibrillary acidic protein and neuronal nuclei immunolabeling surrounding each implant. Main results. Results from rat motor cortex within 300 µm of the implanted electrodes at 24 h, 1 week, and 6 weeks post-implantation showed up to 553 significantly differentially expressed (DE) genes between implanted and non-implanted tissue sections. Regression on the significant DE genes identified the 6–7 genes that had the strongest relationship to histological and electrophysiological metrics, revealing potential candidate biomarkers of recording quality and the tissue response to implanted electrodes. Significance. Our analysis has shed new light onto the potential mechanisms involved in the tissue response to implanted electrodes while generating hypotheses regarding potential biomarkers related to recorded signal quality. A new approach has been developed to understand the tissue response to electrodes implanted in the brain using genes identified through transcriptomics, and to screen those results for potential relationships with functional outcomes.