The thalamocortical pathway, a bundle of myelinated axons that arises from thalamic relay neurons, carries sensory information to the neocortex. Because axon excitation is an obligatory step in the relay of information from the thalamus to the cortex, it represents a potential point of control. We now show that, in adult mice, the activation of nicotinic acetylcholine receptors (nAChRs) in the initial portion of the auditory thalamocortical pathway modulates thalamocortical transmission of information by regulating axon excitability. Exogenous nicotine enhanced the probability and synchrony of evoked action potential discharges along thalamocortical axons in vitro, but had little effect on synaptic release mechanisms. In vivo, the blockade of nAChRs in the thalamocortical pathway reduced sound-evoked cortical responses, especially those evoked by sounds near the acoustic threshold. These data indicate that endogenous acetylcholine activates nAChRs in the thalamocortical pathway to lower the threshold for thalamocortical transmission and to increase the magnitude of sensory-evoked cortical responses. Our results show that a neurotransmitter can modulate sensory processing by regulating conduction along myelinated thalamocortical axons.