Background: Acute ischemia triggers a number of cellular mechanisms not only leading to excitotoxic cell death but also to enhanced neuroplasticity, facilitating neuronal reorganization and functional recovery. Objective: Identifying their critical distinction and transferring these cellular mechanisms to neurophysiological correlates adaptable to patients is crucial to promote recovery post-stroke. The combination of TMS and EEG constitute a promising readout of neuronal network activity in stroke patients. Methods: Using this technique, we investigated the development of local signal processing and global network alterations of 40 stroke patients with motor deficits alongside neural reorganization from the acute to the chronic phase. Results: We show that the TMS-EEG response reflects information about reorganization and signal alterations associated with persistent motor deficits throughout the entire post-stroke period. Early post-stroke in subgroup of patients with severe motor deficits, TMS applied to the lesioned motor cortex evoked a sleep-like slow wave response associated with a cortical off-period, a manifestion of cortical bistability, as well as a rapid disruption of the TMS-induced formation of causal network effects. Mechanistically, these phenomena were linked to lesions affecting ascending activating brainstem fibers. Of note, sleep-like slow waves invariably vanished in the chronic phase, but were highly indicative of a poor functional outcome. Conclusion: In summary, we suggest that transient effects of sleep-like waves and cortical bistability within ipsilesional M1 resulting in excessive inhibition may block functional reorganization leading to a less favorable functional outcome post-stroke, pointing to a new therapeutic target to improve recovery of function.