This paper describes an area and power-efficient VLSI approach for implementing the discrete wavelet transform on streaming multielectrode neurophysiological data in real time. The VLSI implementation is based on the lifting scheme for wavelet computation using the symmlet4 basis with quantized coefficients and integer fixed-point data precision to minimize hardware demands. The proposed design is driven by the need to compress neural signals recorded with high-density microelectrode arrays implanted in the cortex prior to data telemetry. Our results indicate that signal integrity is not compromised by quantization down to 5-bit filter coefficient and 10-bit data precision at intermediate stages. Furthermore, results from analog simulation and modeling show that a hardware-minimized computational core executing filter steps sequentially is advantageous over the pipeline approach commonly used in DWT implementations. The design is compared to that of a B-spline approach that minimizes the number of multipliers at the expense of increasing the number of adders. The performance demonstrates that in vivo real-time DWT computation is feasible prior to data telemetry, permitting large savings in bandwidth requirements and communication costs given the severe limitations on size, energy consumption and power dissipation of an implantable device.