7β-Hydroxycholesterol has been previously demonstrated to inhibit astrocytosis in injured cortex or spinal cord of rats. In this study, we explored the inhibitory effects of the liposome containing 7β-hydroxycholesterol on the reactive astrocytosis caused by the injection of iron into the hippocampus of rats and furthermore evaluated the involvement of reactive astrocytosis in iron-induced epilepsy. Injection of ferric chloride solution unilaterally into the hippocampus of rats induced spontaneous spiking activity ipsilaterally then developed into bilateral hippocampi and generalized convulsive seizures within the first week post-operation, and spontaneous epileptiform activity and generalized seizures lasted as long as 2 weeks post-operation, whereas none of the rats injected with sodium chloride solution unilaterally into the hippocampus developed generalized seizures. With immunohistochemistry and Western blot analyses, apparent reactive astrocytosis in bilateral hippocampi was detected using antibody against glial fibrillary acidic protein 14 days after the injection of ferric chloride solution, but no significant differences were found in the amount of synaptophysin protein, a presynaptic vesicle protein, as compared with the rats injected with sodium chloride solution. Infusion of liposome suspension containing 7β-hydroxycholesterol into the same site immediately after the injection of ferric chloride solution reduced the extent of the reactive astrocytosis by 50%–55% of the amount of glial fibrillary acidic protein in the hippocampi of both hemispheres, and non-significantly elevated the amount of synaptophysin protein in both sides of hippocampus. However, these effects did not significantly modify the seizure latency and the incidence of generalized seizures in the rats. These findings demonstrate the effects of 7β-hydroxycholesterol on the inhibition of reactive astrocytosis caused by iron deposition in the hippocampus of rats, and suggest that the reactive astrocytosis may not play a causal role in the development of iron-induced seizures.