The circuitry within the thalamus creates an intrinsic oscillatory unit whose function depends critically on reciprocal synaptic connectivity between excitatory thalamocortical relay neurons and inhibitory thalamic reticular neurons along with a robust post-inhibitory rebound mechanism in relay neurons. Feedforward and feedback connections between cortex and thalamus reinforce the thalamic oscillatory activity into larger thalamocortical networks to generate sleep spindles and spike-wave discharge of generalized absence epilepsy. The degree of synchrony within the thalamic network seems to be crucial in determining whether normal (spindle) or pathological (spike-wave) oscillations occur, and recent studies show that regulation of excitability in the reticular nucleus leads to dynamical modulation of the state of the thalamic circuit and provide a basis for explaining how a variety of unrelated genetic alterations might lead to the spike-wave phenotype. In addition, given the central role of the reticular nucleus in generating spike-wave discharge, these studies have suggested specific interventions that would prevent seizures while still allowing normal spindle generation to occur. This review is part of the INMED/TINS special issue Physiogenic and pathogenic oscillations: the beauty and the beast, based on presentations at the annual INMED/TINS symposium (http://inmednet.com).