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Although the cochlear implant (CI) is widely considered the most successful neural prosthesis, it is essentially an open-loop system that requires extensive initial fitting and frequent tuning to maintain a high, but not necessarily optimal, level of performance. Two developments in neuroscience and neuroengineering now make it feasible to design a closed-loop CI. One development is the recording and interpretation of evoked potentials (EPs) from the peripheral to the central nervous system. The other is the embedded hardware and software of a modern CI that allows recording of EPs. We review EPs that are pertinent to behavioral functions from simple signal detection and loudness growth to speech discrimination and recognition. We also describe signal processing algorithms used for electric artifact reduction and cancellation, critical to the recording of electric EPs. We then present a conceptual design for a closed-loop CI that utilizes in an innovative way the embedded implant receiver and stimulators to record short latency compound action potentials (~ 1 ms), auditory brainstem responses (1-10 ms) and mid-to-late cortical potentials (20-300 ms). We compare EPs recorded using the CI to EPs obtained using standard scalp electrodes recording techniques. Future applications and capabilities are discussed in terms of the development of a new generation of closed-loop CIs and other neural prostheses.