Abstract: The system of the present invention includes measurement instrumentation that is located in or near the drill bit and used in a measuring-while-drilling system. The instrumentation can be located in a bit box, an extended sub between the drilling motor assembly and the bit box or in the drill bit. The drill bit is connected directly to the bit box or extended sub. The close proximity of the instruments to the drill bit allows for more reliable and useful measurements of drill bit, drilling and formation conditions. The bit box houses instruments that measure various downhole parameters such as inclination of the borehole, the natural gamma ray emission of the earth formations, the electrical resistivity of the earth formations, and a number of mechanical drilling performance parameters. Sonic or electromagnetic signals representing these measurements are transmitted uphole to a receiver associated with receiving equipment located uphole from the drill bit.