Astrocytes extensively infiltrate the neuropil to regulate critical aspects of synaptic development and function. This process is regulated by transcellular interactions between astrocytes and neurons via cell adhesion molecules. How astrocytes coordinate developmental processes among one another to parse out the synaptic neuropil and form non-overlapping territories is unknown. Here we identify a molecular mechanism regulating astrocyte-astrocyte interactions during development to coordinate astrocyte morphogenesis and gap junction coupling. We show that hepaCAM, a disease-linked, astrocyte-enriched cell adhesion molecule, regulates astrocyte competition for territory and morphological complexity in the developing mouse cortex. Furthermore, conditional deletion of Hepacam from developing astrocytes significantly impairs gap junction coupling between astrocytes and disrupts the balance between synaptic excitation and inhibition. Mutations in HEPACAM cause megalencephalic leukoencephalopathy with subcortical cysts in humans. Therefore, our findings suggest that disruption of astrocyte self-organization mechanisms could be an underlying cause of neural pathology.