Reliable optical detection of single action potentials in mammalian neurons has been one of the longest-standing challenges in neuroscience. Here we achieved this goal by using the endogenous fluorescence of a microbial rhodopsin protein, Archaerhodopsin 3 (Arch) from Halorubrum sodomense, expressed in cultured rat hippocampal neurons. This genetically encoded voltage indicator exhibited an approximately tenfold improvement in sensitivity and speed over existing protein-based voltage indicators, with a roughly linear twofold increase in brightness between -150 mV and +150 mV and a sub-millisecond response time. Arch detected single electrically triggered action potentials with an optical signal-to-noise ratio >10. Arch(D95N) lacked endogenous proton pumping and had 50% greater sensitivity than wild type but had a slower response (41 ms). Nonetheless, Arch(D95N) also resolved individual action potentials. Microbial rhodopsin-based voltage indicators promise to enable optical interrogation of complex neural circuits and electrophysiology in systems for which electrode-based techniques are challenging.