Optogenetic manipulations are widely used for investigating the contribution of genetically identified cell types to behavior. Simultaneous electrophysiological recordings are less common, although they are critical for characterizing the specific impact of optogenetic manipulations on neural circuits in vivo. This is at least in part because combining photostimulation with large-scale electrophysiological recordings remains technically challenging, which also poses a limitation for performing extracellular identification experiments. Currently available interfaces that guide light of the appropriate wavelength into the brain combined with an electrophysiological modality suffer from various drawbacks such as a bulky size, low spatial resolution, heat dissipation, or photovoltaic artifacts. To address these challenges, we have designed and fabricated an integrated ultrathin neural interface with 12 optical outputs and 24 electrodes. We used the device to measure the effect of localized stimulation in the anterior olfactory cortex, a paleocortical structure involved in olfactory processing. Our experiments in adult mice demonstrate that because of its small dimensions, our novel tool causes far less tissue damage than commercially available devices. Moreover, optical stimulation and recording can be performed simultaneously, with no measurable electrical artifact during optical stimulation. Importantly, optical stimulation can be confined to small volumes with approximately single-cortical layer thickness. Finally, we find that even highly localized optical stimulation causes inhibition at more distant sites.NEW & NOTEWORTHY In this study, we establish a novel tool for simultaneous extracellular recording and optogenetic photostimulation. Because the device is built using established microchip technology, it can be fabricated with high reproducibility and reliability. We further show that even very localized stimulation affects neural firing far beyond the stimulation site. This demonstrates the difficulty in predicting circuit-level effects of optogenetic manipulations and highlights the importance of closely monitoring neural activity in optogenetic experiments.