In the mammalian cortex, the classic view assumes that the output information of a neuron is encoded in rather stereotyped action potentials, which provide an all-or-none or digital way of communication between cell body and axonal boutons. A role for subthreshold signal propagation within cortical axons has largely been ignored. Recent achievements of direct recordings from axonal structures in the hippocampus and neocortex extended the classic view by the observation that subthreshold-graded signals propagate down the axon over distances of up to 1 mm. At certain synapses, these analog axonal signals modulate action-potential-dependent transmitter release, thereby enabling a hybrid code of information transmission in local cortical circuits.