Action potential generation and conduction requires large quantities of energy to restore Na + and K + ion gradients. We investigated the subcellular location and voltage dependence of this metabolic cost in rat neocortical pyramidal neurons. Using Na +K + charge overlap as a measure of action potential energy efficiency, we found that action potential initiation in the axon initial segment (AIS) and forward propagation into the axon were energetically inefficient, depending on the resting membrane potential. In contrast, action potential backpropagation into dendrites was efficient. Computer simulations predicted that, although the AIS and nodes of Ranvier had the highest metabolic cost per membrane area, action potential backpropagation into the dendrites and forward propagation into axon collaterals dominated energy consumption in cortical pyramidal neurons. Finally, we found that the high metabolic cost of action potential initiation and propagation down the axon is a trade-off between energy minimization and maximization of the conduction reliability of high-frequency action potentials. © 2012 Nature America, Inc. All rights reserved.