In Alzheimer's disease (AD), memory impairment is the most prominent feature that afflicts patients and their families. Although reactive astrocytes have been observed around amyloid plaques since the disease was first described, their role in memory impairment has been poorly understood. Here, we show that reactive astrocytes aberrantly and abundantly produce the inhibitory gliotransmitter GABA by monoamine oxidase-B (Maob) and abnormally release GABA through the bestrophin 1 channel. In the dentate gyrus of mouse models of AD, the released GABA reduces spike probability of granule cells by acting on presynaptic GABA receptors. Suppressing GABA production or release from reactive astrocytes fully restores the impaired spike probability, synaptic plasticity, and learning and memory in the mice. In the postmortem brain of individuals with AD, astrocytic GABA and MAOB are significantly upregulated. We propose that selective inhibition of astrocytic GABA synthesis or release may serve as an effective therapeutic strategy for treating memory impairment in AD.