Chronic changes in excitability and activity can induce homeostatic plasticity. These perturbations may be associated with neurological disorders, particularly those involving loss or dysfunction of GABA interneurons. In distal-less homeobox 1 (Dlx1 −/− ) mice with late-onset interneuron loss and reduced inhibition, we observed both excitatory synaptic silencing and decreased intrinsic neuronal excitability. These homeostatic changes do not fully restore normal circuit function, because synaptic silencing results in enhanced potential for long-term potentiation and abnormal gamma oscillations. Transplanting medial ganglionic eminence interneuron progenitors to introduce new GABAergic interneurons, we demonstrate restoration of hippocampal function. Specifically, miniature excitatory postsynaptic currents, input resistance, hippocampal long-term potentiation, and gamma oscillations are all normalized. Thus, in vivo homeostatic plasticity is a highly dynamic and bidirectional process that responds to changes in inhibition.excitatory/inhibitory balance | gamma frequency oscillations | LTP | neural transplantation P rolonged changes in activity levels induce bidirectional changes in neuronal excitability and synaptic activity known as homeostatic plasticity (1, 2). This phenomenon has been described well at excitatory synapses and functions to maintain activity within a preferred dynamic range. Maintaining excitatory/inhibitory synaptic balance is critical for neuronal information processing and a potential problem when confronted with aberrant states of excitability, such as those associated with autism, schizophrenia, Alzheimer's disease, or epilepsy (3-12).Chronic manipulation of synaptic input and/or action potential (AP) output rates in cortical and hippocampal cell cultures induces homeostatic synaptic scaling, in which the amplitude and then the frequency of pyramidal neuron miniature excitatory postsynaptic currents (mEPSCs) increase when activity is lowered or decrease when activity is raised (13-16). Recent studies have begun to reveal the underlying molecular mechanisms of homeostatic synaptic changes, including the AMPA receptor subunits, synapse-associated calcium-binding proteins, and intracellular signaling cascades involved (14,17,18). Changes to activity also trigger homeostatic plasticity of inhibitory synaptic transmission (19)(20)(21)(22)(23). Homozygous deletion of glutamate decarboxylase 1 (Gad1), the rate-limiting enzyme in the synthesis of GABA, reduced miniature inhibitory postsynaptic current (mIPSC) amplitudes in cultured hippocampal neurons but also blocked further homeostatic changes to mIPSCs. This suggests a key role for regulation of Gad1 expression in inhibitory homeostatic plasticity (23). Intrinsic excitability is also homeostatically regulated by activity. Changes in input resistance (Rin) and voltage-activated K + and Na + channel number (24-27), and in Na + channel compartmentalization (28, 29), have been described following manipulations that chronically alter neuronal activity...