Microglia and astrocytes become reactive following traumatic brain injury (TBI). However, the coordination of this reactivity and its relation to pathophysiology are unclear. Here, we show that microglia transform astrocytes into a neuroprotective phenotype via downregulation of the P2Y1 purinergic receptor. TBI initially caused microglial activation in the injury core, followed by reactive astrogliosis in the peri-injured region and formation of a neuroprotective astrocyte scar. Equivalent changes to astrocytes were observed in vitro after injury. This change in astrocyte phenotype resulted from P2Y1 receptor downregulation, mediated by microglia-derived cytokines. In mice, astrocyte-specific P2Y1 receptor overexpression (Astro-P2Y1OE) counteracted scar formation, while astrocyte-specific P2Y1 receptor knockdown (Astro-P2Y1KD) facilitated scar formation, suggesting critical roles of P2Y1 receptors in the transformation. Astro-P2Y1OE and Astro-P2Y1KD mice showed increased and reduced neuronal damage, respectively. Altogether, our findings indicate that microglia-astrocyte interaction, involving a purinergic signal, is essential for the formation of neuroprotective astrocytes.