We studied the axons of the pyloric dilator neurons in the stomatogastric nervous system of the lobster. The several-centimeters-long portions of these axons in the motor nerves depolarize in response to low concentrations of dopamine (DA) and exhibit peripheral spike initiation in the absence of centrally generated activity. This effect is inhibited by blockers of hyperpolarization-activated inward current (I h ). We show here that peripheral spike initiation was also elicited by D 1 -type receptor agonists and drugs that increase cAMP. This suggests that DA acts via a D 1 -type receptor mechanism to modulate hyperpolarization-activated cyclic nucleotide-gated channels. We used two-electrode voltage clamp of the axon to directly study the effect of DA on I h . Surprisingly, DA decreased the maximal conductance. However, because of a shift of the activation curve to more depolarized potentials, and a change in the slope, conductance was increased at biologically relevant membrane potentials. These changes were solely caused by modulation of I h , as DA had no discernible effect when I h was blocked. In addition, they were not induced by repeated activation and could be mimicked by application of drugs that increase cAMP concentration. DA modulation of I h persisted in the presence of a protein kinase A inhibitor and is therefore potentially mediated by a phosphorylation-independent direct effect of cAMP on the ion channel. A computer model of the axon showed that the changes in maximal conductance and voltage dependence were not qualitatively affected by space-clamp problems.