Prosthetic devices that are controlled by intracortical electrodes recording one's 'thoughts' are a reality today, and no longer merely in the realm of science fiction. However, widespread clinical use of implanted electrodes is hampered by a lack of reliability in chronic recordings, independent of the type of electrodes used. One major hypothesis has been that astroglial scar electrically impedes the electrodes. However, there is a temporal discrepancy between stabilization of scar's electrical properties and recording failure with recording failure lagging by 1 month. In this study, we test a possible explanation for this discrepancy: the hypothesis that chronic inflammation, due to the persistent presence of the electrode, causes a local neurodegenerative state in the immediate vicinity of the electrode. Through modulation of chronic inflammation via stab wound, electrode geometry and age-matched control, we found that after 16 weeks, animals with an increased level of chronic inflammation were associated with increased neuronal and dendritic, but not axonal, loss. We observed increased neuronal and dendritic loss 16 weeks after implantation compared to 8 weeks after implantation, suggesting that the local neurodegenerative state is progressive. After 16 weeks, we observed axonal pathology in the form of hyperphosphorylation of the protein tau in the immediate vicinity of the microelectrodes (as observed in Alzheimer's disease and other tauopathies). The results of this study suggest that a local, late onset neurodegenerative disease-like state surrounds the chronic electrodes and is a potential cause for chronic recording failure. These results also inform strategies to enhance our capability to attain reliable long-term recordings from implantable electrodes in the CNS.