The hyperpolarization-activated cation current (Ih) plays an important role in regulating neuronal excitability, yet its native single-channel properties in the brain are essentially unknown. Here we use variance-mean analysis to study the properties of single Ih channels in the apical dendrites of cortical layer 5 pyramidal neurons in vitro. In these neurons, we find that Ih channels have an average unitary conductance of 680 +/- 30 fS (n = 18). Spectral analysis of simulated and native Ih channels showed that there is little or no channel flicker below 5 kHz. In contrast to the uniformly distributed single-channel conductance, Ih channel number increases exponentially with distance, reaching densities as high as approximately 550 channels/microm2 at distal dendritic sites. These high channel densities generate significant membrane voltage noise. By incorporating a stochastic model of Ih single-channel gating into a morphologically realistic model of a layer 5 neuron, we show that this channel noise is higher in distal dendritic compartments and increased threefold with a 10-fold increased single-channel conductance (6.8 pS) but constant Ih current density. In addition, we demonstrate that voltage fluctuations attributable to stochastic Ih channel gating impact on action potential output, with greater spike-timing precision in models with the experimentally determined single-channel conductance. These data suggest that, in the face of high current densities, the small single-channel conductance of Ih is critical for maintaining the fidelity of action potential output.