Astrocytes play essential roles in development, homeostasis, injury, and repair of the central nervous system (CNS). Their development is tightly regulated by distinct spatial and temporal cues during embryogenesis and into adulthood throughout the CNS. Astrocytes have several important responsibilities such as regulating blood flow and permeability of the blood-CNS barrier, glucose metabolism and storage, synapse formation and function, and axon myelination. In CNS pathologies, astrocytes also play critical parts in both injury and repair mechanisms. Upon injury, they undergo a robust phenotypic shift known as "reactive astrogliosis," which results in both constructive and deleterious outcomes. Astrocyte activation and migration at the site of injury provides an early defense mechanism to minimize the extent of injury by enveloping the lesion area. However, astrogliosis also contributes to the inhibitory microenvironment of CNS injury and potentiate secondary injury mechanisms, such as inflammation, oxidative stress, and glutamate excitotoxicity, which facilitate neurodegeneration in CNS pathologies. Intriguingly, reactive astrocytes are increasingly a focus in current therapeutic strategies as their activation can be modulated toward a neuroprotective and reparative phenotype. This review will discuss recent advancements in knowledge regarding the development and role of astrocytes in the healthy and pathological CNS. We will also review how astrocytes have been genetically modified to optimize their reparative potential after injury, and how they may be transdifferentiated into neurons and oligodendrocytes to promote repair after CNS injury and neurodegeneration.