The mechanisms by which active neurons, via astrocytes, rapidly signal intracerebral arterioles to dilate remain obscure. Here we show that modest elevation of extracellular potassium (K+) activated inward rectifier K+ (Kir) channels and caused membrane potential hyperpolarization in smooth muscle cells (SMCs) of intracerebral arterioles and, in cortical brain slices, induced Kir-dependent vasodilation and suppression of SMC intracellular calcium (Ca2+) oscillations. Neuronal activation induced a rapid (<2 s latency) vasodilation that was greatly reduced by Kir channel blockade and completely abrogated by concurrent cyclooxygenase inhibition. Astrocytic endfeet exhibited large-conductance, Ca2+-sensitive K+ (BK) channel currents that could be activated by neuronal stimulation. Blocking BK channels or ablating the gene encoding these channels prevented neuronally induced vasodilation and suppression of arteriolar SMC Ca2+, without affecting the astrocytic Ca2+ elevation. These results support the concept of intercellular K+ channel-to-K+ channel signaling, through which neuronal activity in the form of an astrocytic Ca2+ signal is decoded by astrocytic BK channels, which locally release K+ into the perivascular space to activate SMC Kir channels and cause vasodilation.