Homeostatic plasticity of intrinsic excitability goes hand in hand with homeostatic plasticity of synaptic transmission. However, the mechanisms linking the two forms of homeostatic regulation have not been identified so far. Using electrophysiological, imaging, and immunohistochemical techniques, we show here that blockade of excitatory synaptic receptors for 2 to 3 d induces an up-regulation of both synaptic transmission at CA3–CA3 connections and intrinsic excitability of CA3 pyramidal neurons. Intrinsic plasticity was found to be mediated by a reduction of Kv1.1 channel density at the axon initial segment. In activity-deprived circuits, CA3–CA3 synapses were found to express a high release probability, an insensitivity to dendrotoxin, and a lack of depolarization-induced presynaptic facilitation, indicating a reduction in presynaptic Kv1.1 function. Further support for the down-regulation of axonal Kv1.1 channels in activity-deprived neurons was the broadening of action potentials measured in the axon. We conclude that regulation of the axonal Kv1.1 channel constitutes a major mechanism linking intrinsic excitability and synaptic strength that accounts for the functional synergy existing between homeostatic regulation of intrinsic excitability and synaptic transmission.