Loss of function of the astrocyte membrane protein MLC1 is the primary genetic cause of the rare white matter disease Megalencephalic Leukoencephalopathy with subcortical Cysts (MLC), which is characterized by disrupted brain ion and water homeostasis. MLC1 is prominently present around fluid barriers in the brain, such as in astrocyte endfeet contacting blood vessels and in processes contacting the meninges. Whether the protein plays a role in other astrocyte domains is unknown. Here, we show that MLC1 is present in distal astrocyte processes, also known as perisynaptic astrocyte processes (PAPs) or astrocyte leaflets, which closely interact with excitatory synapses in the CA1 region of the hippocampus. We find that the PAP tip extending toward excitatory synapses is shortened in Mlc1-null mice. This affects glutamatergic synaptic transmission, resulting in a reduced rate of spontaneous release events and slower glutamate re-uptake under challenging conditions. Moreover, while PAPs in wildtype mice retract from the synapse upon fear conditioning, we reveal that this structural plasticity is disturbed in Mlc1-null mice, where PAPs are already shorter. Finally, Mlc1-null mice show reduced contextual fear memory. In conclusion, our study uncovers an unexpected role for the astrocyte protein MLC1 in regulating the structure of PAPs. Loss of MLC1 alters excitatory synaptic transmission, prevents normal PAP remodeling induced by fear conditioning and disrupts Mandy S. J. Kater and Katharina F. Baumgart shared first authorship.