Reactive astrocytes are strongly induced by central nervous system (CNS) injury and disease, but their role is poorly understood. Here we show that a subtype of reactive astrocytes, which we termed A1, is induced by classically activated neuroinflammatory microglia. We show that activated microglia induce A1 astrocytes by secreting Il-1α, TNF and C1q, and that these cytokines together are necessary and sufficient to induce A1 astrocytes. A1 astrocytes lose the ability to promote neuronal survival, outgrowth, synaptogenesis and phagocytosis, and induce the death of neurons and oligodendrocytes. Death of axotomized CNS neurons in vivo is prevented when the formation of A1 astrocytes is blocked. Finally, we show that A1 astrocytes are abundant in various human neurodegenerative diseases including Alzheimer’s, Huntington’s and Parkinson’s disease, amyotrophic lateral sclerosis and multiple sclerosis. Taken together these findings help to explain why CNS neurons die after axotomy, strongly suggest that A1 astrocytes contribute to the death of neurons and oligodendrocytes in neurodegenerative disorders, and provide opportunities for the development of new treatments for these diseases.