Caenorhabditis elegans regulates egg laying by alternating between an inactive phase and a serotonin-triggered active phase. We found that the conserved ERG [ether-a-go-go (EAG) related gene] potassium channel UNC-103 enables this two-state behavior by limiting excitability of the egg-laying muscles. Using both high-speed video recording and calcium imaging of egg-laying muscles in behaving animals, we found that the muscles appear to be excited at a particular phase of each locomotor body bend. During the inactive phase, this rhythmic excitation infrequently evokes calcium transients or contraction of the egg-laying muscles. During the serotonin-triggered active phase, however, these muscles are more excitable and each body bend is accompanied by a calcium transient that drives twitching or full contraction of the egg-laying muscles. We found that ERG-null mutants lay eggs too frequently, and that ERG function is necessary and sufficient in the egg-laying muscles to limit egg laying. ERG K(+) channels localize to postsynaptic sites in the egg-laying muscle, and mutants lacking ERG have more frequent calcium transients and contractions of the egg-laying muscles even during the inactive phase. Thus ERG channels set postsynaptic excitability at a threshold so that further adjustments of excitability by serotonin generate two distinct behavioral states.