There is a growing interest in understanding tissue organization, homeostasis, and inflammation. However, despite an abundance of data, the organizing principles of tissue biology remain poorly defined. Here, we present a perspective on tissue organization based on the relationships between cell types and the functions that they perform. We provide a formal definition of tissue homeostasis as a collection of circuits that regulate specific variables within the tissue environment, and we describe how the functional organization of tissues allows for the maintenance of both tissue and systemic homeostasis. This leads to a natural definition of inflammation as a response to deviations from homeostasis that cannot be reversed by homeostatic mechanisms alone. We describe how inflammatory signals act on the same cellular functions involved in normal tissue organization and homeostasis in order to coordinate emergency responses to perturbations and ultimately return the system to a homeostatic state. Finally, we consider the hierarchy of homeostatic and inflammatory circuits and the implications for the development of inflammatory diseases.