Fragile X syndrome (FXS) is an X chromosome–linked disease leading to severe intellectual disabilities. FXS is caused by inactivation of the fragile X mental retardation 1 (FMR1) gene, but how FMR1 inactivation induces FXS remains unclear. Using human neurons generated from control and FXS patient-derived induced pluripotent stem (iPS) cells or from embryonic stem cells carrying conditional FMR1 mutations, we show here that loss of FMR1 function specifically abolished homeostatic synaptic plasticity without affecting basal synaptic transmission. We demonstrated that, in human neurons, homeostatic plasticity induced by synaptic silencing was mediated by retinoic acid, which regulated both excitatory and inhibitory synaptic strength. FMR1 inactivation impaired homeostatic plasticity by blocking retinoic acid–mediated regulation of synaptic strength. Repairing the genetic mutation in the FMR1 gene in an FXS patient cell line restored fragile X mental retardation protein (FMRP) expression and fully rescued synaptic retinoic acid signaling. Thus, our study reveals a robust functional impairment caused by FMR1 mutations that might contribute to neuronal dysfunction in FXS. In addition, our results suggest that FXS patient iPS cell–derived neurons might be useful for studying the mechanisms mediating functional abnormalities in FXS.