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Summary: Neuronal hyperactivity induces memory deficits in Alzheimer’s disease. However, how hyperactivity disrupts memory is unclear. Using in vivo synaptic imaging in the mouse visual cortex, we show that structural excitatory-inhibitory synapse imbalance in the apical dendrites favors hyperactivity in early amyloidosis. Consistent with this, natural images elicit neuronal hyperactivity in these mice. Compensatory changes that maintain activity homeostasis disrupt functional connectivity and increase population sparseness such that a small fraction of neurons dominates population activity. These properties reduce the selectivity of neural response to natural images and render visual recognition memory vulnerable to interference. Deprivation of non-specific visual experiences improves the neural representation and behavioral expression of visual familiarity. In contrast, in non-pathological conditions, deprivation of non-specific visual experiences induces disinhibition, increases excitability, and disrupts visual familiarity. We show that disrupted familiarity occurs when the fraction of high-responsive neurons and the persistence of neural representation of a memory-associated stimulus are not constrained.