Rapid energy-efficient signaling along vertebrate axons is achieved through intricate subcellular arrangements of voltage-gated ion channels and myelination. One recently appreciated example is the tight colocalization of K_v7 potassium channels and voltage-gated sodium (Na_v) channels in the axonal initial segment and nodes of Ranvier. The local biophysical properties of these K_v7 channels and the functional impact of colocalization with Na_v channels remain poorly understood. Here, we quantitatively examined K_v7 channels in myelinated axons of rat neocortical pyramidal neurons using high-resolution confocal imaging and patch-clamp recording. K_v7.2 and 7.3 immunoreactivity steeply increased within the distal two-thirds of the axon initial segment and was mirrored by the conductance density estimates, which increased from ∼12 (proximal) to 150 pS μm⁻² (distal). The axonal initial segment and nodal M-currents were similar in voltage dependence and kinetics, carried by K_v7.2/7.3 heterotetramers, 4% activated at the resting membrane potential and rapidly activated with single-exponential time constants (∼15 ms at 28 mV). Experiments and computational modeling showed that while somatodendritic K_v7 channels are strongly activated by the backpropagating action potential to attenuate the afterdepolarization and repetitive firing, axonal K_v7 channels are minimally recruited by the forward-propagating action potential. Instead, in nodal domains K_v7.2/7.3 channels were found to increase Na_v channel availability and action potential amplitude by stabilizing the resting membrane potential. Thus, K_v7 clustering near axonal Na_v channels serves specific and context-dependent roles, both restraining initiation and enhancing conduction of the action potential.