Sound localization by auditory brainstem nuclei relies on the detection of microsecond interaural differences in action potentials that encode sound volume and timing. Neurons in these nuclei express high amounts of the Kv3.1 potassium channel, which allows them to fire at high frequencies with short-duration action potentials. Using computational modeling, we show that high amounts of Kv3.1 current decrease the timing accuracy of action potentials but enable neurons to follow high-frequency stimuli. The Kv3.1b channel is regulated by protein kinase C (PKC), which decreases current amplitude. Here we show that in a quiet environment, Kv3.1b is basally phosphorylated in rat brainstem neurons but is rapidly dephosphorylated in response to high-frequency auditory or synaptic stimulation. Dephosphorylation of the channel produced an increase in Kv3.1 current, facilitating high-frequency spiking. Our results indicate that the intrinsic electrical properties of auditory neurons are rapidly modified to adjust to the ambient acoustic environment.