Long-term synaptic changes, which are essential for learning and memory, are dependent on homeostatic mechanisms that stabilize neural activity. Homeostatic responses have also been implicated in pathological conditions, including nicotine addiction. Although multiple homeostatic pathways have been described, little is known about how compensatory responses are tuned to prevent them from overshooting their optimal range of activity. We found that prolonged inhibition of nicotinic acetylcholine receptors (nAChRs), the major excitatory receptors in the Drosophila CNS, resulted in a homeostatic increase in the Drosophila α7 (Dα7)-nAChR. This response then induced an increase in the transient A-type K(+) current carried by Shaker cognate L (Shal; also known as voltage-gated K(+) channel 4, Kv4) channels. Although increasing Dα7-nAChRs boosted miniature excitatory postsynaptic currents, the ensuing increase in Shal channels served to stabilize postsynaptic potentials. These data identify a previously unknown mechanism for fine tuning the homeostatic response.