Astrocytes are an indispensable part of signal processing within the mammalian brain. Thus, the mode of action of a neuropeptide such as oxytocin (OXT) can only be fully understood considering this integral part of the CNS. Here, we show that OXT regulates astrocytic gene expression, intracellular signaling and specific proteins both in vitro and in vivo. This translates into rapid regulation of astroglial structural and functional properties including cytoskeletal plasticity, coverage of synapses and gap-junction coupling. At the molecular level, we identify the previously undescribed Sp1-Gem signaling cascade as the key driver for these cell type-specific OXT effects. Finally at the behavioral level, we found in vivo that OXT requires astrocytes to exert its well described anxiolytic properties within the hypothalamic paraventricular nucleus. Thus, our study points to OXT receptor-expressing astrocytes as a critical component of the brain OXT system.