Hyperpolarization-activated cyclic nucleotide-gated cation (HCN) channels are the molecular substrate of the hyperpolarization-activated inward current (I(h)). Because the developmental profile of HCN channels in the thalamus is not well understood, we combined electrophysiological, molecular, immunohistochemical, EEG recordings in vivo, and computer modeling techniques to examine HCN gene expression and I(h) properties in rat thalamocortical relay (TC) neurons in the dorsal part of the lateral geniculate nucleus and the functional consequence of this maturation. Recordings of TC neurons revealed an approximate sixfold increase in I(h) density between postnatal day 3 (P3) and P106, which was accompanied by significantly altered current kinetics, cAMP sensitivity, and steady-state activation properties. Quantification on tissue levels revealed a significant developmental decrease in cAMP. Consequently the block of basal adenylyl cyclase activity was accompanied by a hyperpolarizing shift of the I(h) activation curve in young but not adult rats. Quantitative analyses of HCN channel isoforms revealed a steady increase of mRNA and protein expression levels of HCN1, HCN2, and HCN4 with reduced relative abundance of HCN4. Computer modeling in a simplified thalamic network indicated that the occurrence of rhythmic delta activity, which was present in the EEG at P12, differentially depended on I(h) conductance and modulation by cAMP at different developmental states. These data indicate that the developmental increase in I(h) density results from increased expression of three HCN channel isoforms and that isoform composition and intracellular cAMP levels interact in determining I(h) properties to enable progressive maturation of rhythmic slow-wave sleep activity patterns.