Astrocytes are crucial in the formation, fine-tuning, function and plasticity of neural circuits in the central nervous system. However, important questions remain about the mechanisms instructing astrocyte cell fate. We have studied astrogenesis in the ventral nerve cord of Drosophila larvae, where astrocytes exhibit remarkable morphological and molecular similarities to those in mammals. We reveal the births of larval astrocytes from a multipotent glial lineage, their allocation to reproducible positions, and their deployment of ramified arbors to cover specific neuropil territories to form a stereotyped astroglial map. Finally, we unraveled a molecular pathway for astrocyte differentiation in which the Ets protein Pointed and the Notch signaling pathway are required for astrogenesis; however, only Notch is sufficient to direct non-astrocytic progenitors toward astrocytic fate. We found that Prospero is a key effector of Notch in this process. Our data identify an instructive astrogenic program that acts as a binary switch to distinguish astrocytes from other glial cells.