Astrocytes are now recognized as dynamic signaling elements in the brain. Bidirectional communication between neurons and astrocytes involves integration of neuronal inputs by astrocytes and release of gliotransmitters that modulate neuronal excitability and synaptic transmission. The ovarian steroid hormone, 17β-estradiol, in addition to its rapid actions on neuronal electrical activity can rapidly alter astrocyte intracellular calcium concentration ([Ca2+]i) through a membrane-associated estrogen receptor. Using calcium imaging and electrophysiological techniques, we investigated the functional consequences of acute treatment with estradiol on astrocyte–astrocyte and astrocyte–neuron communication in mixed hippocampal cultures. Mechanical stimulation of an astrocyte evoked a [Ca2+]i rise in the stimulated astrocyte, which propagated to the surrounding astrocytes as a [Ca2+]i wave. Following acute treatment with estradiol, the amplitude of the [Ca2+]i elevation in astrocytes around the stimulated astrocyte was attenuated. Further, estradiol inhibited the [Ca2+]i rise in individual astrocytes in response to the metabotropic glutamate receptor agonist, trans-(±)-1-amino-1,3-cyclopentanedicarboxylic acid. Mechanical stimulation of astrocytes induced [Ca2+]i elevations and electrophysiological responses in adjacent neurons. Estradiol rapidly attenuated the astrocyte-evoked glutamate-mediated [Ca2+]i rise and slow inward current in neurons. Also, the incidence of astrocyte-induced increase in spontaneous postsynaptic current frequency was reduced in the presence of estradiol. The effects of estradiol were stereo-specific and reversible following washout. These findings may indicate that the regulation of neuronal excitability and synaptic transmission by astrocytes is sensitive to rapid estradiol-mediated hormonal control. © 2007 Wiley-Liss, Inc.