We present the activity and kinematics of a representative volume-limited (20 pc) sample of 152 late-M and L dwarfs (M7--L8) photometrically selected from the Two Micron All-Sky Survey (2MASS). Using new proper motion measurements and spectrophotometric distance estimates, we calculate tangential velocities. The sample has a mean tangential velocity of = 31.5 km/s, a velocity dispersion of sigma_tan = 20.7 km/s, and a maximum tangential velocity of V_tan = 138.8 km/s. These kinematic results are in excellent agreement with previous studies of ultracool dwarfs in the local solar neighborhood. H_alpha emission, an indicator of chromospheric activity, was detected in 63 of 81 late-M dwarfs and 16 of 69 L dwarfs examined. We find a lack of correlation between activity strength, measured by log(F_H_alpha/F_bol), and V_tan, though velocity distributions suggest that the active dwarfs in our sample are slightly younger than the inactive dwarfs. Consistent with previous studies of activity in ultracool dwarfs, we find that the fraction of H$α$ emitting objects per spectral type peaks at spectral type M7 and declines through mid-L dwarfs. Activity strength is similarly correlated with spectral type for spectral types later than M7. Eleven dwarfs out of 150 show evidence of variability, ranging from small fluctuations to large flare events. We estimate a flare cycle of ~5% for late-M dwarfs and ~2% for L dwarfs. Observations of strong, variable activity on the L1 dwarf 2MASS J10224821+5825453 and an amazing flare event on the the M7 dwarf 2MASS J1028404$-$143843 are discussed.