Substance P (SP) is a prominent neuromodulator, which is produced and released by peripheral damage-sensing (nociceptive) neurons; these neurons also express SP receptors. However, the mechanisms of peripheral SP signaling are poorly understood. We report a signaling pathway of SP in nociceptive neurons: Acting predominantly through NK1 receptors and Gi/o proteins, SP stimulates increased release of reactive oxygen species from the mitochondrial electron transport chain. Reactive oxygen species, functioning as second messengers, induce oxidative modification and augment M-type potassium channels, thereby suppressing excitability. This signaling cascade requires activation of phospholipase C but is largely uncoupled from the inositol 1,4,5-trisphosphate sensitive Ca2+ stores. In rats SP causes sensitization of TRPV1 and produces thermal hyperalgesia. However, the lack of coupling between SP signaling and inositol 1,4,5-trisphosphate sensitive Ca2+ stores, together with the augmenting effect on M channels, renders the SP pathway ineffective to excite nociceptors acutely and produce spontaneous pain. Our study describes a mechanism for neurokinin signaling in sensory neurons and provides evidence that spontaneous pain and hyperalgesia can have distinct underlying mechanisms within a single nociceptive neuron.