"Astrocytes are the most numerous cells in the mammalian central nervous system (CNS), and are increasingly recognized as critical elements in the formation, fine-tuning, function and plasticity of neuronal synapses and brain circuitry. Astrocytes project highly ramified arbors of infiltrative processes among neuronal cell bodies and synapses. Through these extensive interactions with neurons, astrocytes employ a host of channels, receptors and transporters to maintain ion and neurotransmitter homeostasis, and modulate and respond to neuronal activity. A fundamental issue in neuroscience is to understand how astrocytes are born and regulate and respond to neuronal communication, and to pinpoint ways in which the dysfunction of astrocytes contributes to neurological diseases. I studied two glial subtypes in Drosophila that closely associate with synapses. Astrocytes send ramified processes in the neuropil to connect to synapses, whereas ensheathing glia simply enwrap around neuropil. However, in pathological conditions such as injury and neurodegeneration, ensheathing glial membranes infiltrate synaptic regions to phagocytose severed axons. In this thesis, I used the genetically advanced model organism Drosophila melanogaster to uncover cellular and molecular mechanisms that underlie development and function of astrocytes and ensheathing glia. I first described annotation of Gal4 driver lines that express in glial subtypes in embryos, larvae and adult CNS. This screening effort identified important components of a new toolkit for the labeling and manipulation of astrocytes and ensheathing glia. Furthermore, this screening effort proved valuable to predict glia-specific gene expression patterns, where I identified 160 new candidate genes with a potential to express in astrocytes. I successfully performed a large-scale RNA interference (RNAi)-mediated loss-of-function screen and identified new molecular players important for development, morphogenesis and function of astrocytes. Stemming from this RNAi screen, we identified a new genetic program for astrogenesis involving Notch, PointedP1 and Prospero, where Prospero is instructive for astrocyte fate. Moreover, I identified expression of an enzyme Dopamine N-acetyltransferase that processes monoamines in the fly brain and provided complete description of its expression in the larval and adult CNS. I further validated a new method for the separation and validation of trace levels of monoamines. Altogether, our genetic and biochemical analyses identified a new player in astrocytes that will be important to address how astrocytes process and respond to monoamines in fly brain. Finally, I tested a putative function of a taurine/aspartate transporter Eaat2 in the expansion of ensheathing glial membranes in the synaptic regions upon induced neurodegeneration. Ensheathing glia infiltrate their membranes into the neuropil upon injury, which normally does not occur in the healthy neuropil. However, the molecular mechanism that causes such rapid change in the membrane dynamics and engulfment of degenerating axons remains to be explored. Altogether, my thesis discovered several novel candidate genes and tested their requirement in the development and function of astrocytes and ensheathing glia." --