Homeostatic control of synaptic efficacy is often mediated by dynamic regulation of excitatory synaptic receptors. Here, we report a novel form of homeostatic synaptic plasticity based on regulation of shunt currents that control dendritosomatic information transfer. In cortical pyramidal neurons from wild-type mice, HCN1 channels underlie a dendritic hyperpolarization-activated cationic current (I-h) that serves to limit temporal summation of synaptic inputs. In HCN1 knock-out mice, as expected, I-h is reduced in pyramidal neurons and its effects on synaptic summation are strongly diminished. Unexpectedly, we found a markedly enhanced bicuculline-and L-655,708-sensitive ackground GABA(A) current in these cells that could be attributed to selective upregulation of GABA(A) alpha 5 subunit expression in the cortex of HCN1 knock-out mice. Strikingly, despite diminished I-h, baseline sublinear summation of evoked EPSPs was unchanged in pyramidal neurons from HCN1 knock-out mice; however, blocking tonic GABA(A) currents with bicuculline enhanced synaptic summation more strongly in pyramidal cells from HCN1 knock-out mice than in those cells from wild-type mice. Increasing tonic GABA(A) receptor conductance in the context of reduced I-h, using computational or pharmacological approaches, restored normal baseline synaptic summation, as observed in neurons from HCN1 knock-out mice. These data indicate that upregulation of alpha 5 subunit-mediated GABA(A) receptor tonic current compensates quantitatively for loss of dendritic I-h in cortical pyramidal neurons from HCN1 knock-out mice to maintain normal synaptic summation; they further imply that dendritosomatic synaptic efficacy is a controlled variable for homeostatic regulation of cortical neuron excitability in vivo.