Neurons adjust their intrinsic excitability when experiencing a persistent change in synaptic drive. This process can prevent neural activity from moving into either a quiescent state or a saturated state in the face of ongoing plasticity, and is thought to promote stability of the network in which neurons reside. However, most neurons are embedded in recurrent networks, which require a delicate balance between excitation and inhibition to maintain network stability. This balance could be disrupted when neurons independently adjust their intrinsic excitability. Here, we study the functioning of activity-dependent homeostatic scaling of intrinsic excitability (HSE) in a recurrent neural network. Using both simulations of a recurrent network consisting of excitatory and inhibitory neurons that implement HSE, and a mean-field description of adapting excitatory and inhibitory populations, we show that the stability of such adapting networks critically depends on the relationship between the adaptation time scales of both neuron populations. In a stable adapting network, HSE can keep all neurons functioning within their dynamic range, while the network is undergoing several (patho)physiologically relevant types of plasticity, such as persistent changes in external drive, changes in connection strengths, or the loss of inhibitory cells from the network. However, HSE cannot prevent the unstable network dynamics that result when, due to such plasticity, recurrent excitation in the network becomes too strong compared to feedback inhibition. This suggests that keeping a neural network in a stable and functional state requires the coordination of distinct homeostatic mechanisms that operate not only by adjusting neural excitability, but also by controlling network connectivity.