Correlation-based (Hebbian) forms of synaptic plasticity are crucial for the initial encoding of associative memories but likely insufficient to enable the stable storage of multiple specific memories within neural circuits. Theoretical studies have suggested that homeostatic synaptic normalization rules provide an essential countervailing force that can stabilize and expand memory storage capacity. Although such homeostatic mechanisms have been identified and studied for decades, experimental evidence that they play an important role in associative memory is lacking. Here, we show that synaptic scaling, a widely studied form of homeostatic synaptic plasticity that globally renormalizes synaptic strengths, is dispensable for initial associative memory formation but crucial for the establishment of memory specificity. We used conditioned taste aversion (CTA) learning, a form of associative learning that relies on Hebbian mechanisms within gustatory cortex (GC), to show that animals conditioned to avoid saccharin initially generalized this aversion to other novel tastants. Specificity of the aversion to saccharin emerged slowly over a time course of many hours and was associated with synaptic scaling down of excitatory synapses onto conditioning-active neuronal ensembles within gustatory cortex. Blocking synaptic scaling down in the gustatory cortex enhanced the persistence of synaptic strength increases induced by conditioning and prolonged the duration of memory generalization. Taken together, these findings demonstrate that synaptic scaling is crucial for sculpting the specificity of an associative memory and suggest that the relative strengths of Hebbian and homeostatic plasticity can modulate the balance between stable memory formation and memory generalization.