Key points Kv2 channels underlie delayed‐rectifier potassium currents in various neurons, although their physiological roles often remain elusive. Almost nothing is known about Kv2 channel functions in medial entorhinal cortex (mEC) neurons, which are involved in representing space, memory formation, epilepsy and dementia. Stellate cells in layer II of the mEC project to the hippocampus and are considered to be space‐representing grid cells. We used the new Kv2 blocker Guangxitoxin‐1E (GTx) to study Kv2 functions in these neurons. Voltage clamp recordings from mEC stellate cells in rat brain slices showed that GTx inhibited delayed‐rectifier K+ current but not transient A‐type current. In current clamp, GTx had multiple effects: (i) increasing excitability and bursting at moderate spike rates but reducing firing at high rates; (ii) enhancing after‐depolarizations; (iii) reducing the fast and medium after‐hyperpolarizations; (iv) broadening action potentials; and (v) reducing spike clustering. GTx is a useful tool for studying Kv2 channels and their functions in neurons. Abstract The medial entorhinal cortex (mEC) is strongly involved in spatial navigation, memory, dementia and epilepsy. Although potassium channels shape neuronal activity, their roles in mEC are largely unknown. We used the new Kv2 blocker Guangxitoxin‐1E (GTx; 10–100 nm) in rat brain slices to investigate Kv2 channel functions in mEC layer II stellate cells (SCs). These neurons project to the hippocampus and are considered to be grid cells representing space. Voltage clamp recordings from SCs nucleated patches showed that GTx inhibited a delayed rectifier K+ current activating beyond –30 mV but not transient A‐type current. In current clamp, GTx (i) had almost no effect on the first action potential but markedly slowed repolarization of late spikes during repetitive firing; (ii) enhanced the after‐depolarization (ADP); (iii) reduced fast and medium after‐hyperpolarizations (AHPs); (iv) strongly enhanced burst firing and increased excitability at moderate spike rates but reduced spiking at high rates; and (v) reduced spike clustering and rebound potentials. The changes in bursting and excitability were related to the altered ADPs and AHPs. Kv2 channels strongly shape the activity of mEC SCs by affecting spike repolarization, after‐potentials, excitability and spike patterns. GTx is a useful tool and may serve to further clarify Kv2 channel functions in neurons. We conclude that Kv2 channels in mEC SCs are important determinants of intrinsic properties that allow these neurons to produce spatial representation. The results of the present study may also be important for the accurate modelling of grid cells.