cGMP has long been suspected to play a role in synaptic plasticity, but the inaccessibility of nerve terminals to electrical recording has impeded tests of this hypothesis. In posterior pituitary nerve terminals, nitric oxide enhanced Ca(2+)-activated K+ channel activity by activating guanylate cyclase and PKG. This enhancement occurred only at depolarized potentials, so the spike threshold remained unaltered but the afterhyperpolarization became larger. During spike trains, the enhanced afterhyperpolarization promoted Na+ channel recovery from inactivation, thus reducing action potential failures and allowing more Ca(2+) to enter. Activating guanylate cyclase, either with applied nitric oxide, or with physiological stimulation to activate nitric oxide synthase, increased action potential firing. Thus, the cGMP/nitric oxide cascade generates a short-term, use-dependent enhancement of release.