Homeostatic plasticity is hypothesized to bidirectionally regulate neuronal activity around a stable set point to compensate for learning-related plasticity, but to date only upward firing rate homeostasis (FRH) has been demonstrated in vivo . We combined chronic electrophysiology in freely behaving animals with an eye-reopening paradigm to enhance firing in primary visual cortex (V1) and found that neurons bidirectionally regulate firing rates around an individual set point. Downward FRH did not require N-methyl-D-aspartate receptor (NMDAR) signaling and was associated with homeostatic scaling down of synaptic strengths. Like upward FRH, downward FRH was gated by arousal state but in the opposite direction: it occurred during sleep, not during wake. In contrast, firing rate depression associated with Hebbian plasticity happened independently of sleep and wake. Thus, sleep and wake states temporally segregate upward and downward FRH, which might prevent interference or provide unopposed homeostatic compensation when it is needed most.