TRP Vanilloid 1 (TRPV1) is a member of the TRP superfamily that is involved in the modulation of diverse sensations across species from reptiles to humans. In mammals, TRPV1 is predominantly known for its role in the peripheral nervous system as a modulator of noxious and thermal stimuli. However, there is limited knowledge about the role of this sensory channel in the Central Nervous System. Here, we investigated the function of cortical TRPV1 in sensory processing and detection. We implemented a whisker-based vibration detection task to explore the impact of TRPV1 on sensory perception, using two-photon calcium imaging and local pharmacological manipulation. We demonstrate that TRPV1 activation enhances evoked responses in the primary vibrissal somatosensory cortex (vS1): TRPV1 activation increased sensory-evoked responses in single neurons and increased the proportion of neurons that encoded sensory stimuli. These enhanced population responses also correlated with improvements in the task performance. We show that TRPV1 predominantly influenced the encoding of sensory stimuli rather than affecting perceptual choices. Further characterisation of neuronal and behavioural data revealed a left shift in both neurometric and psychometric functions upon TRPV1 activation, indicating heightened sensitivity to stimuli. In line with these observations, inhibiting TRPV1 reduced the evoked responses and detection sensitivity producing a rightward shift in both functions. In summary, our study identifies a physiological role for TRPV1 in tuning sensory-evoked responses and highlights a potential for TRPV1 as a key regulator of sensory perception.