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Introduction: Neuronal death and subsequent denervation of target areas are hallmarks of many neurological disorders. Denervated neurons lose part of their dendritic tree, and are considered "atrophic", i.e. pathologically altered and damaged. The functional consequences of this phenomenon are poorly understood., Results: Using computational modelling of 3D-reconstructed granule cells we show that denervation-induced dendritic atrophy also subserves homeostatic functions: By shortening their dendritic tree, granule cells compensate for the loss of inputs by a precise adjustment of excitability. As a consequence, surviving afferents are able to activate the cells, thereby allowing information to flow again through the denervated area. In addition, action potentials backpropagating from the soma to the synapses are enhanced specifically in reorganized portions of the dendritic arbor, resulting in their increased synaptic plasticity. These two observations generalize to any given dendritic tree undergoing structural changes., Conclusions: Structural homeostatic plasticity, i.e. homeostatic dendritic remodeling, is operating in long-term denervated neurons to achieve functional homeostasis.