Multi-fingered prosthetic limbs are now capable of performing complex movements, closely simulating those of the lost human arm/hand in amputees. Conveying natural control and perception of such sophisticated robotic limbs requires direct interfacing with the nervous system of the users. Both the brain and transected peripheral nerves have been proposed as appropriate locations for such neural interfaces. In the peripheral nerves, several electrode designs have been used successfully to record motor signals, and through stimulation, used to convey sensation in long-term amputee human volunteers. Here we review the advantages and limitations of peripheral nerve interfaces (PNIs) in relation to the desired characteristics for safety and performance. We compare current PNI electrodes and materials designed to increase recording sensitivity and to achieve selective stimulation of different nerves such as those carrying mechanical sensation and limb position information. Emphasis is placed on novel electrode materials, including biological coatings, conductive polymers, and nanostructured modifications. Successful development of reliable PNIs will not only enable natural control and feel of future robotic prosthetics, but will likely be a centerpiece technology in the development of multiple bionic organs.