Recent studies have revealed that hippocampal area CA2 plays an important role in hippocampal network function. Disruption of this region has been implicated in neuropsychiatric disorders. It is well appreciated that cholinergic input to the hippocampus plays an important role in learning and memory. While the effect of elevated cholinergic tone has been well studied in areas CA1 and CA3, it remains unclear how changes in cholinergic tone impact synaptic transmission and the intrinsic properties of neurons in area CA2. In this study, we applied the cholinergic agonist carbachol and performed on-cell, whole-cell, and extracellular recordings in area CA2. We observed that under conditions of high cholinergic tone, CA2 pyramidal neurons depolarized and rhythmically fired bursts of action potentials. This depolarization depended on the activation of M1 and M3 cholinergic receptors. Furthermore, we examined how the intrinsic properties and action-potential firing were altered in CA2 pyramidal neurons treated with 10 µM carbachol. While this intrinsic burst firing persisted in the absence of synaptic transmission, bursts were shaped by synaptic inputs in the intact network. We found that both excitatory and inhibitory synaptic transmission were reduced upon carbachol treatment. Finally, we examined the contribution of different channels to the cholinergic-induced changes in neuronal properties. We found that a conductance from Kv7 channels partially contributed to carbachol-induced changes in resting membrane potential and membrane resistance. We also found that D-type potassium currents contributed to controlling several properties of the bursts, including firing rate and burst kinetics. Furthermore, we determined that T-type calcium channels and small conductance calcium-activated potassium channels play a role in regulating bursting activity.