We have developed instrumentation which stimulates and records electrophysiological signals from populations of suspended cells in microfluidic channels. We are employing this instrumentation in a new approach to cell sorting and flow cytometry which distinguishes cells based on their electrophysiology. This label-free approach is ideal for applications where labeling or genetic modification of cells is undesirable, such as in purifying cells for tissue replacement therapies. Electrophysiology is a powerful indicator of phenotype for electrically-excitable cells such as myocytes and neurons. However, extracellular field potential signals are notoriously weak and large stimulus artifacts can easily obscure these signals if care is not taken to suppress them. This is particularly true for suspended cells. Here, we describe a novel microelectrode configuration and the associated instrumentation for suppressing stimulus artifacts and faithfully recovering the extracellular field potential signal. We show that the device is capable of distinguishing cardiomyocytes from non-cardiomyocytes derived from the same stem cell population. Finally, we explain the relationship between extracellular field potentials and the more familiar transmembrane action potential signal, noting the physiologically important features of these signals.