Anatomical, molecular, and physiological interactions between astrocytes and neuronal synapses regulate information processing in the brain. The fruit fly Drosophila melanogaster has become a valuable experimental system for genetic manipulation of the nervous system and has enormous potential for elucidating mechanisms that mediate neuron-glia interactions. Here, we show the first electrophysiological recordings from Drosophila astrocytes and characterize their spatial and physiological relationship with particular synapses. Astrocyte intrinsic properties were found to be strongly analogous to those of vertebrate astrocytes, including a passive current-voltage relationship, low membrane resistance, high capacitance, and dye-coupling to local astrocytes. Responses to optogenetic stimulation of glutamatergic premotor neurons were correlated directly with anatomy using serial electron microscopy reconstructions of homologous identified neurons and surrounding astrocytic processes. Robust bidirectional communication was present: neuronal activation triggered astrocytic glutamate transport via excitatory amino acid transporter 1 (Eaat1), and blocking Eaat1 extended glutamatergic interneuron-evoked inhibitory postsynaptic currents in motor neurons. The neuronal synapses were always located within 1 μm of an astrocytic process, but none were ensheathed by those processes. Thus, fly astrocytes can modulate fast synaptic transmission via neurotransmitter transport within these anatomical parameters. J. Comp. Neurol. 524:1979-1998, 2016. © 2016 Wiley Periodicals, Inc.