Acetylcholine critically influences hippocampal-dependent learning. Cholinergic fibers innervate hippocampal neuron axons, dendrites, and somata. The effects of acetylcholine on axonal information processing, though, remain unknown. By stimulating cholinergic fibers and making electrophysiological recordings from hippocampal dentate gyrus granule cells, we show that synaptically released acetylcholine preferentially lowered the action potential threshold, enhancing intrinsic excitability and synaptic potential-spike coupling. These effects persisted for at least 30 min after the stimulation paradigm and were due to muscarinic receptor activation. This caused sustained elevation of axonal intracellular Ca²⁺ via T-type Ca²⁺ channels, as indicated by two-photon imaging. The enhanced Ca²⁺ levels inhibited an axonal K_V7/M current, decreasing the spike threshold. In support, immunohistochemistry revealed muscarinic M1 receptor, Ca_V3.2, and K_V7.2/7.3 subunit localization in granule cell axons. Since alterations in axonal signaling affect neuronal firing patterns and neurotransmitter release, this is an unreported cellular mechanism by which acetylcholine might, at least partly, enhance cognitive processing.