Neocortical neurons in vivo process each of their individual inputs in the context of ongoing synaptic background activity, produced by the thousands of presynaptic partners a typical neuron has. Previous work has shown that background activity affects multiple aspects of neuronal and network function. However, its effect on the induction of spike-timing dependent plasticity (STDP) is not clear. Here we report that injections of simulated background conductances (produced by a dynamic-clamp system) into pyramidal cells in rat brain slices selectively reduced the magnitude of timing-dependent synaptic potentiation while leaving the magnitude of timing-dependent synaptic depression unchanged. The conductance-dependent suppression also sharpened the STDP curve, with reliable synaptic potentiation induced only when EPSPs and action potentials (APs) were paired within 8 ms of each other. Dual somatic and dendritic patch recordings suggested that the deficit in synaptic potentiation arose from shunting of dendritic EPSPs and APs. Using a biophysically detailed computational model, we were not only able to replicate the conductance-dependent shunting of dendritic potentials, but show that synaptic background can truncate calcium dynamics within dendritic spines in a way that affects potentiation more strongly than depression. This conductance-dependent regulation of synaptic plasticity may constitute a novel homeostatic mechanism that can prevent the runaway synaptic potentiation to which Hebbian networks are vulnerable.