Spinal muscular atrophy (SMA) is a pediatric neuromuscular disease characterized by the loss of the lower spinal motor neurons due to survival motor neuron (SMN) deficiency. Motor neuron dysfunction at the glutamatergic afferent synapse is observed during early stages of SMA disease progression, which could be targeted therapeutically prior to cell death. However, the motor neuron cell autonomous and non-cell autonomous disease mechanisms driving this phenotype remain unclear. Our study reveals a non-cell autonomous SMN-associated disease mechanism affecting glutamate transporter (GLAST) activity in astrocytes that contributes to human motor neuron dysfunction in SMA. Transcriptomic analysis of SMA patient human induced pluripotent stem cell (iPSC)-derived astrocytes identified a significant downregulation of genes associated with astrocytic regulation of the synapse, including glutamate neurotransmission. This finding was substantiated by our microelectrode array analysis of motor neuron activity, which was severely diminished specifically in the presence of patient-derived astrocytes. Co-culturing patient-derived motor neurons with healthy-derived astrocytes showed comparable firing rates and bursting activity to healthy-derived motor neurons, suggesting diminished neural activity is an astrocyte-mediated phenotype in this system. Towards defining astrocyte-intrinsic defects that could induce motor neuron dysfunction, we identified abnormally low levels of excitatory amino acid transporter (EAAT1/GLAST) in patient-derived astrocytes, which when selectively inhibited in healthy co-cultures could phenocopy the diminished neural activity previously observed in patient-derived co-cultures. Caveolin-1, an SMN-interacting lipid raft protein associated with glutamate transporter regulation, showed increased protein levels and accumulation in patient astrocytes. Both GLAST and caveolin-1 phenotypes could be partially rescued via lentiviral-mediated SMN re-expression in patient astrocytes. Together, our work defines a novel SMN-associated disease mechanism involving abnormal glutamate transporter activity and regulation in astrocytes that can directly diminish motor neuron function in SMA.