Cortical astrocytes encode sensory information through their calcium dynamics, but it remains unclear if modulation of astrocyte calcium transients can change somatosensory circuits and behaviour in vivo. Here, we used a novel knockdown approach to selectively reduce astrocyte N-methyl-D-aspartate receptors (NMDAR). We found that these ionotropic receptors contribute to astrocyte Ca2+transients encoding sensory information. This was essential for the optimal processing of sensory information in nearby neurons, since a reduction in astrocyte NMDARs caused circuit dysfunction and impaired neuronal responses to stimulation. This led to sensory discrimination deficits in the animal. Overall, our findings show that astrocytes can rapidly respond to glutamatergic transmission via their NMDAR and these receptors are an important component for astrocyte-neuron interactions that regulate cortical sensory discrimination in vivo.