An implantable wireless system was developed for recording muscle afferent activity and stimulating peripheral nerves with cuff electrodes. The proposed system was fabricated into the nerve cuff electrode, neural amplifier, neural stimulator, and wireless communication system with battery power. The nerve cuff electrode and neural amplifier were designed to improve the signal-to-interference ratio and signal-to-noise ratio. The wireless communication system was designed based on the medical implant communication service regulations to be suitable for implantation. The main function of this system was to extract muscle afferent activity from peripheral nerve during functional electrical stimulation. The cuff electrodes were chronically implanted on the sciatic nerve for recording and on the tibial and peroneal nerves for stimulation. When the extension and flexion movements of ankle joint were elicited from alternative electrical stimuli, the corresponding neural signals and ankle angles were recorded simultaneously. The muscle afferent activity was then extracted from the recorded neural signal through a simple blanking process. The experimental results showed that the ankle movements could be detected from the extracted muscle afferent activity.