Key points In the present study, we document the role of compact myelin in regulating the structural and functional properties of ion channels at the nerve terminals, using electrophysiology, dynamic Na+ imaging and immunohistochemistry. The subcellular segregation of Na+ channel expression and intracellular Na+ dynamics at the heminode and terminal was lost in the dysmyelinated axon from Long–Evans shaker rats, which lack compact myelin. In Long–Evans shaker rats, loss of the Navβ4 subunit specifically at the heminode reduced resurgent and persistent Na+ currents, whereas K+ channel expression and currents were increased. The results of the present study suggest that there is a specific role for compact myelin in dictating protein expression and function at the axon heminode and in regulating excitability of the nerve terminal. Abstract Axon myelination increases the conduction velocity and precision of action potential propagation. Although the negative effects of demyelination are generally attributed to conduction failure, accumulating evidence suggests that myelination also regulates the structural properties and molecular composition of the axonal membrane. In the present study, we investigated how myelination affects ion channel expression and function, particularly at the last axon heminode before the nerve terminal, which regulates the presynaptic excitability of the nerve terminal. We compared the structure and physiology of normal axons and those of the Long–Evans shaker (LES) rat, which lacks compact myelin. The normal segregation of Na+ channel expression and dynamics at the heminode and terminal was lost in the LES rat. Specifically, NaV‐α subunits were dispersed and NaVβ4 subunit was absent, whereas the density of K+ channels was increased at the heminode. Correspondingly, resurgent and persistent Na+ currents were reduced and K+ current was increased. Taken together, these data suggest a specific role for compact myelin in the orchestration of ion channel expression and function at the axon heminode and in regulating excitability of the nerve terminal.