•  The intrinsic excitability of a hippocampal CA3 pyramidal cell (CA3‐PC), but not CA1‐PC, is enhanced by repetitive somatic firing at a physiologically relevant frequency (10 Hz for 2 s). •  Such an excitability change is mediated by the Ca2+‐ and Src family kinase‐dependent endocytosis of D‐type K+ channel subunit Kv1.2. •  We provide evidence that the surface expression of D‐type K+ channels is higher in the distal apical dendrites than in the proximal apical dendrites in CA3‐PCs. •  These results help us understand neuronal computational mechanisms underlying the cognitive functions of the hippocampal CA3 area. Abstract  The intrinsic excitability of neurons plays a critical role in the encoding of memory at Hebbian synapses and in the coupling of synaptic inputs to spike generation. It has not been studied whether somatic firing at a physiologically relevant frequency can induce intrinsic plasticity in hippocampal CA3 pyramidal cells (CA3‐PCs). Here, we show that a conditioning train of 20 action potentials (APs) at 10 Hz causes a persistent reduction in the input conductance and an acceleration of the AP onset time in CA3‐PCs, but not in CA1‐PCs. Induction of such long‐term potentiation of intrinsic excitability (LTP‐IE) was accompanied by a reduction in the D‐type K+ current, and was abolished by the inhibition of endocytosis or protein tyrosine kinase (PTK). Consistently, the CA3‐PCs from Kv1.2 knock‐out mice displayed no LTP‐IE with the same conditioning. Furthermore, the induction of LTP‐IE depended on the back‐propagating APs (bAPs) and intact distal apical dendrites. These results indicate that LTP‐IE is mediated by the internalization of Kv1.2 channels from the distal regions of apical dendrites, which is triggered by bAP‐induced dendritic Ca2+ signalling and the consequent activation of PTK.