State-of-the-art intraneural electrodes made from silicon or polyimide substrates have shown promise in selectively modulating efferent and afferent activity in the peripheral nervous system. However, when chronically implanted, these devices trigger a multiphase foreign body response ending in device encapsulation. The presence of encapsulation increases the distance between the electrode and the excitable tissue, which not only reduces the recordable signal amplitude but also requires increased current to activate nearby axons. Herein, this study reports a novel conducting polymer based intraneural electrode which has Young's moduli similar to that of nerve tissue. The study first describes material optimization of the soft wire conductive matrix and evaluates their mechanical and electrochemical properties. Second, the study demonstrates 3T3 cell survival when cultured with media eluted from the soft wires. Third, the study presents acute in vivo functionality for stimulation of peripheral nerves to evoke force and compound muscle action potential in a rat model. Furthermore, comprehensive histological analyses show that soft wires elicit significantly less scar tissue encapsulation, less changes to axon size, density and morphology, and reduced macrophage activation compared to polyimide implants in the sciatic nerves at 1 month postimplantation. © 2019 WILEY-VCH Verlag GmbH & Co. KGaA, Weinheim.