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The stress response necessitates an immediate boost in vital physiological functions from their homeostatic operation to an elevated emergency response. However, the neural mechanisms underlying this state-dependent change remain largely unknown. Using a combination of in vivo and ex vivo electrophysiology with computational modeling, we report that corticotropin releasing hormone (CRH) neurons in the paraventricular nucleus of the hypothalamus (PVN), the effector neurons of hormonal stress response, rapidly transition between distinct activity states through recurrent inhibition. Specifically, in vivo optrode recording shows that under non-stress conditions, CRHPVN neurons often fire with rhythmic brief bursts (RB), which, somewhat counterintuitively, constrains firing rate due to long (~2 s) interburst intervals. Stressful stimuli rapidly switch RB to continuous single spiking (SS), permitting a large increase in firing rate. A spiking network model shows that recurrent inhibition can control this activity-state switch, and more broadly the gain of spiking responses to excitatory inputs. In biological CRHPVN neurons ex vivo, the injection of whole-cell currents derived from our computational model recreates the in vivo-like switch between RB and SS, providing direct evidence that physiologically relevant network inputs enable state-dependent computation in single neurons. Together, we present a novel mechanism for state-dependent activity dynamics in CRHPVN neurons.