© 2015 Elsevier Inc. All rights reserved. The nervous system must balance excitatory and inhibitory input to constrain network activity levels within a proper dynamic range. This is a demanding requirement during development, when networks form and throughout adulthood as networks respond to constantly changing environments. Defects in the ability to sustain a proper balance of excitatory and inhibitory activity are characteristic of numerous neurological disorders such as schizophrenia, Alzheimer's disease, and autism. A variety of homeostatic mechanisms appear to be critical for balancing excitatory and inhibitory activity in a network. These are operative at the level of individual neurons, regulating their excitability by adjusting the numbers and types of ion channels, and at the level of synaptic connections, determining the relative numbers of excitatory versus inhibitory connections a neuron receives. Nicotinic cholinergic signaling is well positioned to contribute at both levels because it appears early in development, extends across much of the nervous system, and modulates transmission at many kinds of synapses. Further, it is known to influence the ratio of excitatory-to-inhibitory synapses formed on neurons during development. GABAergic inhibitory neurons are likely to be key for maintaining network homeostasis (limiting excitatory output), and nicotinic signaling is known to prominently regulate the activity of several GABAergic neuronal subtypes. But how nicotinic signaling achieves this and how networks may compensate for the loss of such input are important questions remaining unanswered. These issues are reviewed.