We demonstrate the use of functional optical coherence tomography (fOCT) for observing action potential propagation by detecting scattering changes in neural tissue. FOCT images of nerve fibers from the abdominal ganglion of the sea slug Aplysia californica were obtained before, during, and after electrical stimulation with monophasic as well as biphasic voltage pulses. A reversible localized increase in optical scattering was noted in the images obtained during stimulation compared to the images obtained before stimulation. In addition, M (motion)-mode images showed transient optical changes due to spontaneous electrical activity. To exclude local laser-induced temperature changes as a source for stimulation, we monitored the temperature effects of prolonged laser exposure with a thermistor and found that there was no substantial temperature increase. We conclude that OCT is sensitive to the optical changes induced in electrically stimulated nerve fibers, and that there is minimal tissue heating and no detectable damage caused by exposure to the laser.