Principal neurons of the medial superior olive (MSO) convey azimuthal sound localization cues through modulation of their rate of action potential firing. Previous intracellular studies in vitro have shown that action potentials appear highly attenuated at the soma of MSO neurons, potentially reflecting specialized action potential initiation and/or a physically distant site of generation. To examine this question more directly, we made dual patch-clamp recordings from MSO principal neurons in gerbil brainstem slices. Using somatic and dendritic whole-cell recordings, we show that graded action potentials at the soma are highly sensitive to the rate of rise of excitation and undergo strong attenuation in their backpropagation into the dendrites (length constant = 76 µm), particularly during strong dendritic excitation. Using paired somatic whole-cell and axonal loose-patch recordings, we show that action potentials recorded in the axon at distances over 25-30 µm are all-or-none, and uniform in amplitude even when action potentials appear graded at the soma. This proximal zone corresponded to the start of myelination in the axon, as assessed with immunocytochemical staining for myelin basic protein in single-labeled neurons. Finally, the axon was capable of sustaining remarkably high firing rates, with perfect entrainment occurring at frequencies of up to 1 kHz. Together, our findings show that action potential signaling in MSO principal neurons is highly secure, but shows a restricted invasion of the somatodendritic compartment of the cell. This restriction may be important for minimizing distortions in synaptic integration during the high frequencies of synaptic input encountered in the MSO.