M-current is widespread in the nervous system. It stabilizes cell excitability, and its suppression by muscarinic receptor activation underlies slow synaptic transmission in sympathetic neurons. Suppression of M-current was one of the first examples of neuromodulation of a potassium current, but the mechanism is not understood. Single-channel recording was used to study this issue. An M-channel with two conductance states, which exhibited appropriate voltage-dependent kinetics with two modes of gating, has been resolved. Mode 1 comprises short open time, low open probability events, and mode 2 openings represent long open time, high open probability behavior. Muscarine decreased M-channel activity by selectively reducing mode 2 M-channel gating through a diffusible second messenger. It is suggested that control of modal gating may be a widespread mechanism for neuromodulation.