Understanding which cellular compartments are influenced during neuromodulation underpins any rational effort to explain and optimize outcomes. Axon terminals have long been speculated to be sensitive to polarization, but experimentally informed models for CNS stimulation are lacking. We conducted simultaneous intracellular recording from the neuron soma and axon terminal (blebs) during extracellular stimulation with weak sustained (DC) uniform electric fields in mouse cortical slices. Use of weak direct current stimulation (DCS) allowed isolation and quantification of changes in axon terminal biophysics, relevant to both suprathreshold (e.g., deep brain stimulation, spinal cord stimulation, and transcranial magnetic stimulation) and subthreshold (e.g., transcranial DCS and transcranial alternating current stimulation) neuromodulation approaches. Axon terminals polarized with sensitivity (mV of membrane polarization per V/m electric field) 4 times than somas. Even weak polarization (<2 mV) of axon terminals significantly changes action potential dynamics (including amplitude, duration, conduction velocity) in response to an intracellular pulse. Regarding a cellular theory of neuromodulation, we explain how suprathreshold CNS stimulation activates the action potential at terminals while subthreshold approaches modulate synaptic efficacy through axon terminal polarization. We demonstrate that by virtue of axon polarization and resulting changes in action potential dynamics, neuromodulation can influence analog-digital information processing.