Transforming growth factor β1 (TGF‐β1) is a pleiotropic cytokine expressed throughout the CNS. Previous studies demonstrated that TGF‐β1 contributes to maintain neuronal survival, but mechanistically this effect is not well understood. We generated a CNS‐specific TGF‐β1‐deficient mouse model to investigate the functional consequences of TGF‐β1‐deficiency in the adult mouse brain. We found that depletion of TGF‐β1 in the CNS resulted in a loss of the astrocyte glutamate transporter (GluT) proteins GLT‐1 (EAAT2) and GLAST (EAAT1) and decreased glutamate uptake in the mouse hippocampus. Treatment with TGF‐β1 induced the expression of GLAST and GLT‐1 in cultured astrocytes and enhanced astroglial glutamate uptake. Similar to GLT‐1‐deficient mice, CNS‐TGF‐β1‐deficient mice had reduced brain weight and neuronal loss in the CA1 hippocampal region. CNS‐TGF‐β1‐deficient mice showed GluN2B‐dependent aberrant synaptic plasticity in the CA1 area of the hippocampus similar to the glutamate transport inhibitor DL‐TBOA and these mice were highly sensitive to excitotoxic injury. In addition, hippocampal neurons from TGF‐β1‐deficient mice had elevated GluN2B‐mediated calcium signals in response to extrasynaptic glutamate receptor stimulation, whereas cells treated with TGF‐β1 exhibited reduced GluN2B‐mediated calcium signals. In summary, our study demonstrates a previously unrecognized function of TGF‐β1 in the CNS to control extracellular glutamate homeostasis and GluN2B‐mediated calcium responses in the mouse hippocampus.