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. •HepaCAM regulates astrocyte competition for territory in the mouse cortex•Loss of astrocytic hepaCAM alters connexin 43 localization and gap junction coupling•Connexin 43 regulates astrocyte morphology through channel-independent mechanisms•Loss of astrocytic hepaCAM decreases synaptic inhibition and increases excitation How astrocytes coordinate their interactions with different cells and establish non-overlapping territories is unknown. Baldwin et al. show that hepaCAM controls astrocyte morphogenesis and competition for territory. Loss of hepaCAM from astrocytes alters localization of connexin 43, impairs gap junction coupling, and disrupts the balance between synaptic excitation and inhibition.