Local increase in blood flow during neural activity forms the basis for functional brain imaging, but its mechanism remains poorly defined. Here we show that cortical astrocytes in vivo possess a powerful mechanism for rapid vasodilation. We imaged the activity of astrocytes labeled with the calcium (Ca²⁺)-sensitive indicator rhod-2 in somatosensory cortex of adult mice. Photolysis of caged Ca²⁺ in astrocytic endfeet ensheathing the vessel wall was associated with an 18% increase in arterial cross-section area that corresponded to a 37% increase in blood flow. Vasodilation occurred with a latency of only 1–2 s, and both indomethacin and the cyclooxygenase-1 inhibitor SC-560 blocked the photolysis-induced hyperemia. These observations implicate astrocytes in the control of local microcirculation and suggest that one of their physiological roles is to mediate vasodilation in response to increased neural activity.