Background Branching events in phylogenetic trees reflect bifurcating and/or multifurcating speciation and splitting events. In the presence of gene flow, a phylogeny cannot be described by a tree but is instead a directed acyclic graph known as a phylogenetic network. Both phylogenetic trees and networks are typically reconstructed using computational analysis of multi-locus sequence data. The advent of high-throughput sequencing technologies has brought about two main scalability challenges: (1) dataset size in terms of the number of taxa and (2) the evolutionary divergence of the taxa in a study. The impact of both dimensions of scale on phylogenetic tree inference has been well characterized by recent studies; in contrast, the scalability limits of phylogenetic network inference methods are largely unknown. Results In this study, we quantify the performance of state-of-the-art phylogenetic network inference methods on large-scale datasets using empirical data sampled from natural mouse populations and a range of simulations using model phylogenies with a single reticulation. We find that, as in the case of phylogenetic tree inference, the performance of leading network inference methods is negatively impacted by both dimensions of dataset scale. In general, we found that topological accuracy degrades as the number of taxa increases; a similar effect was observed with increased sequence mutation rate. The most accurate methods were probabilistic inference methods which maximize either likelihood under coalescent-based models or pseudo-likelihood approximations to the model likelihood. The improved accuracy obtained with probabilistic inference methods comes at a computational cost in terms of runtime and main memory usage, which become prohibitive as dataset size grows past twenty-five taxa. None of the probabilistic methods completed analyses of datasets with 30 taxa or more after many weeks of CPU runtime. Conclusions We conclude that the state of the art of phylogenetic network inference lags well behind the scope of current phylogenomic studies. New algorithmic development is critically needed to address this methodological gap. Electronic supplementary material The online version of this article (doi:10.1186/s12859-016-1277-1) contains supplementary material, which is available to authorized users.