Oxytocin receptors (OXTRs) are expressed in hippocampal CA2; however, their functions in this region are unknown. Here, the authors combined optogenetics and electrophysiology to determine that activation of CA2 pyramidal cell OXTRs alters the shape of the spikes generated by these neurons, reducing their peak amplitude and after-hyperpolarization. This effect is the result of OXTR-driven stimulation of phospholipase C, which in turn activates KCNQ-containing M-channels and the protein kinase C pathway, both of which influence spike shape. The increase in CA2 bursting that results has implications for CA2–CA1 neurotransmission and plasticity.