Gliotransmission, the release of molecules from astrocytes, regulates neuronal excitability and synaptic transmission in situ. Whether this process affects neuronal network activity in vivo is not known. Using a combination of astrocyte-specific molecular genetics, with in vivo electrophysiology and pharmacology, we determined that gliotransmission modulates cortical slow oscillations, a rhythm characterizing nonrapid eye movement sleep. Inhibition of gliotransmission by the expression of a dominant negative SNARE domain in astrocytes affected cortical slow oscillations, reducing the duration of neuronal depolarizations and causing prolonged hyperpolarizations. These network effects result from the astrocytic modulation of intracortical synaptic transmission at two sites: a hypofunction of postsynaptic NMDA receptors, and by reducing extracellular adenosine, a loss of tonic A1 receptor-mediated inhibition. These results demonstrate that rhythmic brain activity is generated by the coordinated action of the neuronal and glial networks.