Neuron-restrictive silencer factor/repressor element 1 (RE1)-silencing transcription factor (NRSF/REST) is a transcriptional repressor of a large cluster of neural genes containing RE1 motifs in their promoter region. NRSF/REST is ubiquitously expressed in non-neuronal cells, including astrocytes, while it is down-regulated during neuronal differentiation. While neuronal NRSF/REST homeostatically regulates intrinsic excitability and synaptic transmission, the role of the high NRSF/REST expression levels in the homeostatic functions of astrocytes is poorly understood. Here, we investigated the functional consequences of NRSF/REST deletion in primary cortical astrocytes derived from NRSF/REST conditional knockout mice (KO). We found that NRSF/REST KO astrocyte displayed a markedly reduced activity of inward rectifying K ⁺ channels subtype 4.1 (Kir4.1) underlying spatial K ⁺ buffering that was associated with a decreased expression and activity of the glutamate transporter-1 (GLT-1) responsible for glutamate uptake by astrocytes. The effects of the impaired astrocyte homeostatic functions on neuronal activity were investigated by co-culturing wild-type hippocampal neurons with NRSF/REST KO astrocytes. Interestingly, neurons experienced increased neuronal excitability at high firing rates associated with decrease after hyperpolarization and increased amplitude of excitatory postsynaptic currents. The data indicate that astrocytic NRSF/REST directly participates in neural circuit homeostasis by regulating intrinsic excitability and excitatory transmission and that dysfunctions of NRSF/REST expression in astrocytes may contribute to the pathogenesis of neurological disorders.