KCNQ2 and KCNQ3 ion channel pore-forming subunits coassemble to form a heteromeric voltage-gated potassium channel that underlies the neuronal M-current. We and others showed that calmodulin (CaM) binds to specific sequence motifs in the C-terminal domain of KCNQ2 and KCNQ3. We also found that a fusion protein containing a KCNQ2 CaM-binding motif, coexpressed with KCNQ2 and KCNQ3, competes with the full-length KCNQ2 channel for CaM binding and thereby decreases KCNQ2/3 current density in heterologous cells. We have explored the importance of CaM binding for the generation of the native M-current and regulation of membrane excitability in rat hippocampal neurons in primary cell culture. M-current properties were studied in cultured neurons by using whole-cell patch clamp recording. The M-current density is lower in neurons expressing the CaM-binding motif fusion protein, as compared to control neurons transfected with vector alone. In contrast, no change in M-current density is observed in cells transfected with a mutant fusion protein that is unable to bind CaM. The CaM-binding fusion protein does not influence the rapidly inactivating A-current or the large conductance calcium-activated potassium channel-mediated fast spike afterhyperpolarization in neurons in which the M-current is suppressed. Furthermore, the CaM-binding fusion protein, but not the nonbinding mutant, increases both the number of action potentials evoked by membrane depolarization and the size of the spike afterdepolarization. These results suggest that CaM binding regulates M-channel function and membrane excitability in the native neuronal environment.