We describe a fast activity-dependent homeostatic regulation of intrinsic excitability of identified neurons in mouse dorsal striatum, the striatal output neurons. It can be induced by brief bursts of activity, is expressed on a time scale of seconds, limits repetitive firing, and can convert regular firing patterns to irregular ones. We show it is due to progressive recruitment of the KCNQ2/3 channels that generate the M current. This homeostatic mechanism is significantly reduced in striatal output neurons of the R6/2 transgenic mouse model of Huntington's disease, at an age when the neurons are hyperactive in vivo and the mice begin to exhibit locomotor impairment. Furthermore, it can be rescued by bath perfusion with retigabine, a KCNQ channel activator, and chronic treatment improves locomotor performance. Thus, M-current dysfunction may contribute to the hyperactivity and network dysregulation characteristic of this neurodegenerative disease, and KCNQ2/3 channel regulation may be a target for therapeutic intervention.