Rett Syndrome (RTT) is a devastating neurological disorder that is caused by mutations in the MECP2 gene. Mecp2-mutant mice have been used as a model system to study the disease mechanism. Our previous work has suggested that MeCP2 malfunction in neurons is the primary cause of RTT in the mouse. However, the neurophysiological consequences of MeCP2 malfunction remain obscure. Using whole-cell patch-clamp recordings in cortical slices, we show that spontaneous activity of pyramidal neurons is reduced in Mecp2-mutant mice. This decrease is not caused by a change in the intrinsic properties of the recorded neurons. Instead, the balance between cortical excitation and inhibition is shifted to favor inhibition over excitation. Moreover, analysis of the miniature excitatory postsynaptic currents (mEPSCs)/inhibitory postsynaptic currents (mIPSCs) in the Mecp2-mutant cortex reveals a reduction in mEPSC amplitudes, without significant change in the average mIPSC amplitude or frequency. These findings provide the first detailed electrophysiological analysis of Mecp2-mutant mice and provide a framework for understanding the pathophysiology of the disease and tools for studying the underlying disease mechanisms.