Nitrous oxide (N2O) induces rapid and durable antidepressant effects. The cellular and circuit mechanisms mediating this process are not known. Here we find that a single dose of inhaled N2O induces rapid and specific activation of layer V (L5) pyramidal neurons in the cingulate cortex of rodents exposed to chronic stress conditions. N2O-induced L5 activation rescues a stress-associated hypoactivity state, persists following exposure, and is necessary for its antidepressant-like activity. Although NMDA-receptor antagonism is believed to be a primary mechanism of action for N2O, L5 neurons activate even when NMDA-receptor function is attenuated through both pharmacological and genetic approaches. By examining different molecular and circuit targets, we identify N2O-induced inhibition of calcium-sensitive potassium (SK2) channels as a key molecular interaction responsible for driving specific L5 activity along with ensuing antidepressant-like effects. These results suggest that N2O-induced L5 activation is crucial for its fast antidepressant action and this effect involves novel and specific molecular actions in distinct cortical cell types.