We present a spectroscopic analysis of over 38,000 low-mass stars from the Sloan Digital Sky Survey (SDSS) Data Release 5 (DR5). Analysis of this unprecedentedly large sample confirms the previously detected decrease in the fraction of magnetically active stars (as traced by Hα emission) as a function of the vertical distance from the Galactic plane. The magnitude and slope of this effect vary as a function of spectral type. Using simple 1D dynamical models, we demonstrate that the drop in activity fraction can be explained by thin-disk dynamical heating and a rapid decrease in magnetic activity. The timescale for this rapid activity decrease changes according to the spectral type. By comparing our data to the simulations, we calibrate the age–activity relation at each M dwarf spectral type. We also present evidence for a possible decrease in the metallicity as a function of height above the Galactic plane. In addition to our activity analysis, we provide line measurements, molecular band indices, colors, radial velocities, 3D space motions, and mean properties as a function of spectral type for the SDSS DR5 low-mass star sample.