The ascending cholinergic system dynamically regulates sensory perception and cognitive function, but it remains unclear how this modulation is executed in neocortical circuits. Here, we demonstrate that the cholinergic system controls the integrative operations of neocortical principal neurons by modulating dendritic excitability. Direct dendritic recordings revealed that the optogenetic-evoked release of acetylcholine (ACh) transformed the pattern of dendritic integration in layer 5B pyramidal neurons, leading to the generation of dendritic plateau potentials which powerfully drove repetitive action potential output. In contrast, the synaptic release of ACh did not positively modulate axo-somatic excitability. Mechanistically, the transformation of dendritic integration was mediated by the muscarinic ACh receptor-dependent enhancement of dendritic R-type calcium channel activity, a compartment-dependent modulation which decisively controlled the associative computations executed by layer 5B pyramidal neurons. Our findings therefore reveal a biophysical mechanism by which the cholinergic system controls dendritic computations causally linked to perceptual detection. •Optogenetic release of ACh positively modulates neocortical principal neuron excitability•Optogenetic release of ACh selectively controls dendritic excitability•Dendritic excitability is transformed by a mAChR-mediated modulation of calcium channels•Cholinergic modulation impacts behaviorally relevant dendritic integration Williams and Fletcher use optogenetic and high-resolution electrophysiological techniques to demonstrate that the cholinergic system directly controls the electrical excitability of the dendrites of neocortical principal neurons, through the modulation of calcium channels, to powerfully enhance behaviorally relevant associative computations.