The neural encoding of sensory stimuli is subject to the brain's internal circuit dynamics. Recent work has demonstrated that the resting brain exhibits widespread, coordinated activity that plays out over multisecond timescales in the form of quasi-periodic spiking cascades. Here we demonstrate that these intrinsic dynamics persist during the presentation of visual stimuli and markedly influence the efficacy of feature encoding in the visual cortex. During periods of passive viewing, the sensory encoding of visual stimuli was determined by quasi-periodic cascade cycle evolving over several seconds. During this cycle, high efficiency encoding occurred during peak arousal states, alternating in time with hippocampal ripples, which were most frequent in low arousal states. However, during bouts of active locomotion, these arousal dynamics were abolished: the brain remained in a state in which visual coding efficiency remained high and ripples were absent. We hypothesize that the brain's observed dynamics during awake, passive viewing reflect an adaptive cycle of alternating exteroceptive sensory sampling and internal mnemonic function.