Perineuronal nets (PNNs) are a specialized form of extracellular matrix in the CNS, embodying parvalbumin expressing inhibitory neurons. The PNN assembles towards the end of the period of heightened plasticity, the critical period, in parallel with maturation of the inhibitory network. Degradation of PNNs with the enzyme Chondroitinase ABC (chABC) reopens for plasticity in adults. Together this suggests that PNNs serves as a break on plasticity by stabilizing synapses and maintaining the inhibitory-excitatory balance in the cortex. How the PNN contributes to cortical processing and how its removal opens for plasticity remain elusive. I investigated how the removal of PNNs in primary visual cortex (V1) influences cortical processing and plasticity in rats, by injecting chABC in V1 and measuring neuronal activity with chronically implanted tetrodes. The PNN was completely degraded after three days, and then reassembled over 60 days. All functional studies were performed within 21 days of enzymatic treatment. Degradation of the PNN caused a non-significant reduction in activity of the inhibitory neurons with more than 50% reduction in mean firing rate compared to controls. Tuning properties, such as orientation selectivity and OD were unaffected. In order to elucidate how removal of the PNN influences plasticity I used monocular deprivation (MD) to induce activity-dependent plasticity. One eyelid was sutured shut and neuronal activity recorded daily; after five days, the suture was removed and OD reassessed. In accordance with previous studies, MD for five days in the chABC-injected animals produced a shift in OD. Already after one day of MD, neurons contralateral to the deprived eye showed a 50% reduction in firing rate and continued to be reduced throughout the MD period. Conversely, neurons ipsilateral to the deprived eye showed more than 90% increase in firing rate after one day of MD, after which the activity stabilized. The reduced activity of inhibitory neurons after PNN degradation supports the hypothesis that the increased adult plasticity may be caused by a shift in the inhibitory-excitatory balance. The increased activity seen ipsilateral to the deprived eye could be an early indication of a functional change. I have also studied the effects of anesthesia on cortical processing. For more than 50 years, anesthetized animals have been used to study the visual system. To what extent general anesthetics affect populations of neurons and response properties of single cells have not been determined. I found that neurons in V1 respond very differently to anesthesia; while some were stable or showed increase in firing rate compared to in the awake state, most neurons showed reduced firing rate. Furthermore, the stability in orientation tuning between the two states was highly variable between cells. Altogether, anesthesia should be used with caution when investigating cortical function.