The recent development of large multielectrode recording arrays has made it affordable for an increasing number of laboratories to record from multiple brain regions simultaneously. The development of analytical tools for array data, however, lags behind these technological advances in hardware. In this paper, we present a method based on forward modeling for estimating current source density from electrophysiological signals recorded on a two-dimensional grid using multi-electrode rectangular arrays. This new method, which we call two-dimensional inverse Current Source Density (iCSD 2D), is based upon and extends our previous one- and three-dimensional techniques. We test several variants of our method, both on surrogate data generated from a collection of Gaussian sources, and on model data from a population of layer 5 neocortical pyramidal neurons. We also apply the method to experimental data from the rat subiculum. The main advantages of the proposed method are the explicit specification of its assumptions, the possibility to include system-specific information as it becomes available, the ability to estimate CSD at the grid boundaries, and lower reconstruction errors when compared to the traditional approach. These features make iCSD 2D a substantial improvement over the approaches used so far and a powerful new tool for the analysis of multielectrode array data. We also provide a free GUI-based MATLAB toolbox to analyze and visualize our test data as well as user datasets.