Brain-machine interfaces (BMIs) use signals from the brain to control a device such as a computer cursor. Various types of signals have been used as BMI inputs, from single-unit action potentials to scalp potentials. Recently, intermediate-level signals such as subdural field potentials have also shown promise. These different signal types are likely to provide different amounts of information, but we do not yet know what signal types are necessary to enable a particular BMI function, such as identification of reach target location, control of a two-dimensional cursor or the dynamics of limb movement. Here we evaluated the performance of field potentials, measured either intracortically (local field potentials, LFPs) or epidurally (epidural field potential, EFPs), in terms of the ability to decode reach direction. We trained rats to move a joystick with their forepaw to control the motion of a sipper tube to one of the four targets in two dimensions. We decoded the forelimb reach direction from the field potentials using linear discriminant analysis. We achieved a mean accuracy of 69 ± 3% with EFPs and 57 ± 2% with LFPs, both much better than chance. Signal quality remained good up to 13 months after implantation. This suggests that using epidural signals could provide BMI inputs of high quality with less risk to the patient than using intracortical recordings.