Transduction of graded synaptic input into trains of all-or-none action potentials (spikes) is a crucial step in neural coding. Hodgkin identified three classes of neurons with qualitatively different analog-to-digital transduction properties. Despite widespread use of this classification scheme, a generalizable explanation of its biophysical basis has not been described. We recorded from spinal sensory neurons representing each class and reproduced their transduction properties in a minimal model. With phase plane and bifurcation analysis, each class of excitability was shown to derive from distinct spike initiating dynamics. Excitability could be converted between all three classes by varying single parameters, moreover, several parameters, when varied one at a time, had functionally equivalent effects on excitability. From this, we conclude that the spike-initiating dynamics associated with each of Hodgkins classes represent different outcomes in a nonlinear competition between oppositely directed, kinetically mismatched currents. Class 1 excitability occurs through a saddle node on invariant circle bifurcation when net current at perithreshold potentials is inward (depolarizing) at steady state. Class 2 excitability occurs through a Hopf bifurcation when, despite net current being outward (hyperpolarizing) at steady state, spike initiation occurs because inward current activates faster than outward current. Class 3 excitability occurs through a quasi-separatrix crossing when fast-activating inward current overpowers slow-activating outward current during a stimulus transient, although slow-activating outward current dominates during constant stimulation. Experiments confirmed that different classes of spinal lamina I neurons express the subthreshold currents predicted by our simulations and, further, that those currents are necessary for the excitability in each cell class. Thus, our results demonstrate that all three classes of excitability arise from a continuum in the direction and magnitude of subthreshold currents. Through detailed analysis of the spike-initiating process, we have explained a fundamental link between biophysical properties and qualitative differences in how neurons encode sensory input.