Slow periodic EEG discharges are common in CNS disorders. The pathophysiology of this aberrant rhythmic activity is poorly understood. We used a computational model of a neocortical network with a dynamic homeostatic scaling rule to show that loss of input (partial deafferentation) can trigger network reorganization that results in pathological periodic discharges. The decrease in average firing rate in the network by deafferentation was compensated by homeostatic synaptic scaling of recurrent excitation among pyramidal cells. Synaptic scaling succeeded in recovering the network target firing rate for all degrees of deafferentation (fraction of deafferented cells), but there was a critical degree of deafferentation for pathological network reorganization. For deafferentation degrees below this value, homeostatic upregulation of recurrent excitation had minimal effect on the macroscopic network dynamics. For deafferentation above this threshold, however, a slow periodic oscillation appeared, patterns of activity were less sparse, and bursting occurred in individual neurons. Also, comparison of spike-triggered afferent and recurrent excitatory conductances revealed that information transmission was strongly impaired. These results suggest that homeostatic plasticity can lead to secondary functional impairment in case of cortical disorders associated with cell loss.