Prion protein (PrP^C) interaction with stress inducible protein 1 (STI1) mediates neuronal survival and differentiation. However, the function of PrP^C in astrocytes has not been approached. In this study, we show that STI1 prevents cell death in wild‐type astrocytes in a protein kinase A‐dependent manner, whereas PrP^C‐null astrocytes were not affected by STI1 treatment. At embryonic day 17, cultured astrocytes and brain extracts derived from PrP^C‐null mice showed a reduced expression of glial fibrillary acidic protein (GFAP) and increased vimentin and nestin expression when compared with wild‐type, suggesting a slower rate of astrocyte maturation in PrP^C‐null animals. Furthermore, PrP^C‐null astrocytes treated with STI1 did not differentiate from a flat to a process‐bearing morphology, as did wild‐type astrocytes. Remarkably, STI1 inhibited proliferation of both wild‐type and PrP^C‐null astrocytes in a protein kinase C‐dependent manner. Taken together, our data show that PrP^C and STI1 are essential to astrocyte development and act through distinct signaling pathways. � 2009 Wiley‐Liss, Inc.