Intrinsic excitability is a key feature dictating neuronal response to synaptic input. Here we investigate the recent observation that dentate granule neurons exhibit a more depolarized voltage threshold for action potential initiation than CA3 pyramidal neurons. We find no evidence that tonic GABA currents, leak or voltage‐gated potassium conductances, or the expression of sodium channel isoform differences can explain this depolarized threshold. Axonal initial segment voltage‐gated sodium channels, which are dominated by the Na_V1.6 isoform in both cell types, distribute more proximally and exhibit lower overall density in granule neurons than in CA3 neurons. To test possible contributions of sodium channel distributions to voltage threshold and to test whether morphological differences participate, we performed simulations of dentate granule neurons and of CA3 pyramidal neurons. These simulations revealed that cell morphology and sodium channel distribution combine to yield the characteristic granule neuron action potential upswing and voltage threshold. Proximal axon sodium channel distribution strongly contributes to the higher voltage threshold of dentate granule neurons for two reasons. First, action potential initiation closer to the somatodendritic current sink causes the threshold of the initiating axon compartment to rise. Second, the proximity of the action potential initiation site to the recording site causes somatic recordings to more faithfully reflect the depolarized threshold of the axon than in cells like CA3 neurons, with distally initiating action potentials. Our results suggest that the proximal location of axon sodium channels in dentate granule neurons contributes to the intrinsic excitability differences between DG and CA3 neurons and may participate in the low‐pass filtering function of dentate granule neurons. © 2009 Wiley‐Liss, Inc.