Stroke causes pronounced and widespread slowing of neural activity. Despite decades of work exploring these abnormal neural dynamics and their associated functional impairments, their causes remain largely unclear. To close this gap in understanding, we applied a neurophysiological corticothalamic circuit model to simulate magnetoencephalography (MEG) power spectra recorded from chronic stroke patients. Comparing model-estimated physiological parameters to those of controls, patients demonstrated significantly lower intrathalamic inhibition in the lesioned hemisphere, despite the absence of direct damage to the thalamus itself. We hypothesized that this disinhibition could instead be related to secondary degeneration of the thalamus, for which growing evidence exists in the literature. Further analyses confirmed that spectral slowing correlated significantly with overall secondary degeneration of the ipsilesional thalamus, encompassing decreased thalamic volume, altered tissue microstructure, and decreased blood flow. Crucially, this relationship was mediated by model-estimated thalamic disinhibition, suggesting a causal link between secondary thalamic degeneration and abnormal brain dynamics via thalamic disinhibition. Finally, thalamic degeneration was correlated significantly with poorer cognitive and language outcomes, but not lesion volume, reinforcing that thalamus damage may account for additional individual variability in poststroke disability. Overall, our findings indicate that the frequently observed poststroke slowing reflects a disruption of corticothalamic circuit dynamics due to secondary thalamic dysfunction, and highlights the thalamus as an important target for understanding and potentially treating poststroke brain dysfunction.