Neural electrodes are essential tools widely used in both the basic neuroscience studies and clinical applications to treat various neurodegenerative diseases. In this chapter we explore the common and novel thin film materials used in fabrication of neural electrodes. Discussion will include the physical and chemical properties of thin film coating materials that make them advantageous compared to hard and solid electrodes like silicon etc. To assess the biocompatibiity requirements for the neural electrodes, it is important to understand the anatomy of the brain and the neural environment. This chapter will discuss the typical immune response around the implant with coatings and the tests for biocompatibility. How nanotechnology offers huge potential in the fabrication of high performance electrodes with thin film coating are addressed in therms of the current state of the art materials and fabrication technology. At the end, the future trends in research related to thin film coatings with be presented briefly.