The gut-derived orexigenic peptide hormone ghrelin enhances neuronal firing in the substantia nigra pars compacta, where dopaminergic neurons modulate the function of the nigrostriatal system for motor coordination. Here we describe a novel mechanism by which ghrelin enhances firing of nigral dopaminergic neurons by inhibiting voltage-gated potassium Kv7/KCNQ/M-channels through its receptor GHS-R1a and activation of the PLC-PKC pathway. Brain slice recordings of substantia nigra pars compacta neurons reveal that ghrelin inhibits native Kv7/KCNQ/M-currents. This effect is abolished by selective inhibitors of GHS-R1a, PLC and PKC. Transgenic suppression of native Kv7/KCNQ/M-channels in mice or channel blockade with XE991 abolishes ghrelin-induced hyperexcitability. In vivo, intracerebroventricular ghrelin administration causes increased dopamine release and turnover in the striatum. Microinjection of ghrelin or XE991 into substantia nigra pars compacta results in contralateral dystonic posturing, and attenuation of catalepsy elicited by systemic administration of the D2 receptor antagonist haloperidol. Our findings indicate that the ghrelin/KCNQ signalling is likely a common pathway utilized by the nervous system.