Generation of action potentials (APs) is a crucial step in neuronal information processing. Existing biophysical models for AP generation almost universally assume that individual voltage-gated sodium channels operate statistically independently, and their avalanche-like opening that underlies AP generation is coordinated only through the transmembrane potential. However, biological ion channels of various types can exhibit strongly cooperative gating when clustered. Cooperative gating of sodium channels has been suggested to explain rapid onset dynamics and large threshold variability of APs in cortical neurons. It remains however unknown whether these characteristic properties of cortical APs can be reproduced if only a fraction of channels express cooperativity, and whether the presence of cooperative channels has an impact on encoding properties of neuronal populations. To address these questions we have constructed a conductance-based neuron model in which we continuously varied the size of a fraction [Formula: see text] of sodium channels expressing cooperativity and the strength of coupling between cooperative channels [Formula: see text]. We show that starting at a critical value of the coupling strength [Formula: see text], the activation curve of sodium channels develops a discontinuity at which opening of all coupled channels becomes an all-or-none event, leading to very rapid AP onsets. Models with a small fraction, [Formula: see text], of strongly cooperative channels generate APs with the most rapid onset dynamics. In this regime APs are triggered by simultaneous opening of the cooperative channel fraction and exhibit a pronounced biphasic waveform often observed in cortical neurons. We further show that presence of a small fraction of cooperative Na+ channels significantly improves the ability of neuronal populations to phase-lock their firing to high frequency input fluctuation. We conclude that presence of a small fraction of strongly coupled sodium channels can explain characteristic features of cortical APs and has a functional impact of enhancing the spike encoding of rapidly varying signals.