Neuroinflammatory microglia secrete cytokines to induce neurotoxic reactive astrocytes, which are one of the major causes of neuronal death. However, the intrinsic key regulators underlying neurotoxic reactive astrocytes induction are unknown. Here we show that the transmembrane protein 164 (TMEM164) is an early-response intrinsic factor that regulates neurotoxic astrocyte reactivity. TMEM164 overexpression inhibits the induction of neurotoxic reactive astrocytes, maintains normal astrocytic functions and suppresses neurotoxic reactive astrocyte-mediated neuronal death by decreasing the secretion of neurotoxic saturated lipids. Adeno-associated virus-mediated, astrocyte-specific TMEM164 overexpression in male and female mice prevents the induction of neurotoxic reactive astrocytes, dopaminergic neuronal loss and motor deficits in a Parkinson's disease model. Notably, brain-wide astrocyte-specific TMEM164 overexpression prevents the induction of neurotoxic reactive astrocytes, amyloid β deposition, neurodegeneration and memory decline in the 5XFAD Alzheimer's disease mouse model, suggesting that TMEM164 could serve as a potential therapeutic target for neurodegenerative disorders.