The balance between excitation and inhibition is critical in the physiology of the cerebral cortex. To understand the influence of inhibitory control on the emergent activity of the cortical network, inhibition was progressively blocked in a slice preparation that generates spontaneous rhythmic up states at a similar frequency to those occurring in vivo during slow-wave sleep or anesthesia. Progressive removal of inhibition induced a parametric shortening of up state duration and elongation of the down states, the frequency of oscillations decaying. Concurrently, a gradual increase in the network firing rate during up states occurred. The slope of transitions between up and down states was quantified for different levels of inhibition. The slope of upward transitions reflects the recruitment of the local network and was progressively increased when inhibition was decreased, whereas the speed of activity propagation became faster. Removal of inhibition eventually resulted in epileptiform activity. Whereas gradual reduction of inhibition induced linear changes in up/down states and their propagation, epileptiform activity was the result of a nonlinear transformation. A computational network model showed that strong recurrence plus activity-dependent hyperpolarizing currents were sufficient to account for the observed up state modulations and predicted an increase in activity-dependent hyperpolarization following up states when inhibition was decreased, which was confirmed experimentally.