To understand how electrical signal processing in cortical pyramidal neurons is executed by ion channels, it is essential to know their subcellular distribution. M-channels (encoded by Kv7.2-Kv7.5/KCNQ2-KCNQ5 genes) have multiple important functions in neurons, including control of excitability, spike afterpotentials, adaptation, and theta resonance. Nevertheless, the subcellular distribution of these channels has remained elusive. To determine the M-channel distribution within CA1 pyramidal neurons, we combined whole-cell patch-clamp recording from the soma and apical dendrite with focal drug application, in rat hippocampal slices. Both a M-channel opener (retigabine [N-(2-amino-4-(4-fluorobenzylamino)-phenyl) carbamic acid ethyl ester]) and a blocker (XE991 [10,10-bis(4-pyridinylmethyl)-9(10H)-antracenone]) changed the somatic subthreshold voltage response but had no observable effect on local dendritic responses. Under conditions promoting dendritic Ca2+ spikes, local somatic but not dendritic application of M-channel blockers (linopirdine and XE991) enhanced the Ca2+ spikes. Simultaneous dendritic and somatic whole-cell recordings showed that the medium afterhyperpolarization after a burst of spikes underwent strong attenuation along the apical dendrite and was fully blocked by somatic XE991 application. Finally, by combining patch-clamp and extracellular recordings with computer simulations, we found that perisomatic M-channels reduce the summation of EPSPs. We conclude that functional M-channels appear to be concentrated in the perisomatic region of CA1 pyramidal neurons, with no detectable M-channel activity in the distal apical dendrites.