The direct neural control of external devices such as computer displays or prosthetic limbs requires the accurate decoding of neural activity rep- resenting continuous movement. We develop a real-time control system using the spiking activity of approximately 40 neurons recorded with an electrode array implanted in the arm area of primary motor cortex. In contrast to previous work, we develop a control-theoretic approach that explicitly models the motion of the hand and the probabilistic re- lationship between this motion and the mean firing rates of the cells in 70 bins. We focus on a realistic cursor control task in which the sub- ject must move a cursor to “hit” randomly placed targets on a computer monitor. Encoding and decoding of the neural data is achieved with a Kalman filter which has a number of advantages over previous linear filtering techniques. In particular, the Kalman filter reconstructions of hand trajectories in off-line experiments are more accurate than previ- ously reported results and the model provides insights into the nature of the neural coding of movement.