Reliable real-time low-latency spike sorting with large data throughput is essential for studies of neural network dynamics and for brain-machine interfaces (BMIs), in which the stimulation of neural networks is based on the networks’ most recent activity. However, the majority of existing multi-electrode spike-sorting algorithms are unsuited for processing high quantities of simultaneously recorded data. Recording from large neuronal networks using large high-density electrode sets (thousands of electrodes) imposes high demands on the data-processing hardware regarding computational complexity and data transmission bandwidth; this, in turn, entails demanding requirements in terms of chip area, memory resources and processing latency. This paper presents computational complexity optimisation techniques, which facilitate the use of spike-sorting algorithms in large multi-electrode-based recording systems. The techniques are then applied to a previously published algorithm, on its own, unsuited for large electrode set recordings. Further, a real-time low-latency high-performance VLSI hardware architecture of the modified algorithm is presented, featuring a folded structure capable of processing the activity of hundreds of neurons simultaneously. The hardware is reconfigurable “on-the-fly” and adaptable to the non-stationarities of neuronal recordings. By transmitting exclusively spike time stamps and/or spike waveforms, its real-time processing offers the possibility of data bandwidth and data storage reduction.