In humans, temporal lobe epilepsy (TLE) is often associated with Ammon's horn sclerosis (AHS) characterized by hippocampal cell death, gliosis and granule cell dispersion (GCD) in the dentate gyrus. Granule cells surviving TLE have been proposed to be hyperexcitable and to play an important role in seizure generation. However, it is unclear whether this applies to conditions of AHS. We studied granule cells using the intrahippocampal kainate injection mouse model of TLE, brain slice patch-clamp recordings, morphological reconstructions and immunocytochemistry. With progressing AHS and GCD, ‘epileptic’ granule cells of the injected hippocampus displayed a decreased input resistance, a decreased membrane time constant and an increased rheobase. The resting leak conductance was doubled in epileptic granule cells and roughly 70–80% of this difference were sensitive to K+ replacement. Of the increased K+ leak, about 50% were sensitive to 1 mm Ba2+. Approximately 20–30% of the pathological leak was mediated by a bicuculline-sensitive GABAA conductance. Epileptic granule cells had strongly enlarged inwardly rectifying currents with a low micromolar Ba2+ IC50, reminiscent of classic inward rectifier K+ channels (Irk/Kir2). Indeed, protein expression of Kir2 subunits (Kir2.1, Kir2.2, Kir2.3, Kir2.4) was upregulated in epileptic granule cells. Immunolabelling for two-pore weak inward rectifier K+ channels (Twik1/K2P1.1, Twik2/K2P6.1) was also increased. We conclude that the excitability of granule cells in the sclerotic focus of TLE is reduced due to an increased resting conductance mainly due to upregulated K+ channel expression. These results point to a local adaptive mechanism that could counterbalance hyperexcitability in epilepsy.