Perceptual hallucinations are present in neurological and psychiatric disorders and amputees. While the hallucinations can be drug-induced, it has been described that they can even be provoked in healthy subjects. Understanding their manifestation could thus unveil how the brain processes sensory information and might evidence the generative nature of perception. In this work, we investigate the generation of tactile hallucinations on biologically inspired, artificial skin. To model tactile hallucinations, we apply homeostasis, a change in the excitability of neurons during sensory deprivation, in a Deep Boltzmann Machine (DBM). We find that homeostasis prompts hallucinations of previously learned patterns on the artificial skin in the absence of sensory input. Moreover, we show that homeostasis is capable of inducing the formation of meaningful latent representations in a DBM and that it significantly increases the quality of the reconstruction of these latent states. Through this, our work provides a possible explanation for the nature of tactile hallucinations and highlights homeostatic processes as a potential underlying mechanism.