Tactile perception relies on reliable transmission and modulation of low-threshold information as it travels from the periphery to the brain. During pathological conditions, tactile stimuli can aberrantly engage nociceptive pathways leading to the perception of touch as pain, known as mechanical allodynia. Two main drivers of peripheral tactile information, low-threshold mechanoreceptors (LTMRs) and postsynaptic dorsal column neurons (PSDCs), terminate in the brainstem dorsal column nuclei (DCN). Activity within the DRG, spinal cord, and DCN have all been implicated in mediating allodynia, yet the DCN remains understudied at the cellular, circuit, and functional levels compared to the other two. Here, we show that the gracile nucleus (Gr) of the DCN mediates tactile sensitivity for low-threshold stimuli and contributes to mechanical allodynia during neuropathic pain in mice. We found that the Gr contains local inhibitory interneurons in addition to thalamus-projecting neurons, which are differentially innervated by primary afferents and spinal inputs. Functional manipulations of these distinct Gr neuronal populations resulted in bidirectional changes to tactile sensitivity, but did not affect noxious mechanical or thermal sensitivity. During neuropathic pain, silencing Gr projection neurons or activating Gr inhibitory neurons was able to reduce tactile hypersensitivity, and enhancing inhibition was able to ameliorate paw withdrawal signatures of neuropathic pain, like shaking. Collectively, these results suggest that the Gr plays a specific role in mediating hypersensitivity to low-threshold, innocuous mechanical stimuli during neuropathic pain, and that Gr activity contributes to affective, pain-associated phenotypes of mechanical allodynia. Therefore, these brainstem circuits work in tandem with traditional spinal circuits underlying allodynia, resulting in enhanced signaling of tactile stimuli in the brain during neuropathic pain.