Sleep exerts many effects on mammalian forebrain networks, including homeostatic effects on both synaptic strengths and firing rates. We used large-scale recordings to examine the activity of neurons in the frontal cortex of rats and first observed that the distribution of pyramidal cell firing rates was wide and strongly skewed toward high firing rates. Moreover, neurons from different parts of that distribution were differentially modulated by sleep substates. Periods of nonREM sleep reduced the activity of high firing rate neurons and tended to upregulate firing of slow-firing neurons. By contrast, the effect of REM was to reduce firing rates across the entire rate spectrum. Microarousals, interspersed within nonREM epochs, increased firing rates of slow-firing neurons. The net result of sleep was to homogenize the firing rate distribution. These findings are at variance with current homeostatic models and provide a novel view of sleep in adjusting network excitability. •Pyramidal cell firing rates are widely distributed and skewed toward high firing rates•Neurons from opposite ends of that distribution are oppositely modulated by sleep•Sleep stages have systematically varying effects on neurons of different firing rates•REM, nonREM, and microarousal effects cooperate to create the sleep homeostatic effect Watson et al. reveal a new form of regulation of neural activity by sleep. The firing rates of fast- and slow-firing neurons are homogenized over sleep. This effect is due to contributions from REM, nonREM, and sleep microarousals.