Homeostatic plasticity may compensate for Hebbian forms of synaptic plasticity, such as long-term potentiation (LTP) and depression (LTD), by scaling neuronal output without changing the relative strength of individual synapses. This delicate balance between neuronal output and distributed synaptic weight may be necessary for maintaining efficient encoding of information across neuronal networks. Here, we demonstrate that Arc/Arg3.1, an immediate-early gene (IEG) that is rapidly induced by neuronal activity associated with information encoding in the brain, mediates homeostatic synaptic scaling of AMPA type glutamate receptors (AMPARs) via its ability to activate a novel and selective AMPAR endocytic pathway. High levels of Arc/Arg3.1 block the homeostatic increases in AMPAR function induced by chronic neuronal inactivity. Conversely, loss of Arc/Arg3.1 results in increased AMPAR function and abolishes homeostatic scaling of AMPARs. These observations, together with evidence that Arc/Arg3.1 is required for memory consolidation, reveal the importance of Arc/Arg3.1's dynamic expression as it exerts continuous and precise control over synaptic strength and cellular excitability.