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Astrocytes greatly participate to inflammatory and neurotoxic reactions occurring in neurodegenerative diseases and are valuable pharmacological targets to support neuroprotection. Here we used human astrocytes generated from reprogrammed fibroblasts as a cellular model to study the effect of the compound Laquinimod and its active metabolite de-Laquinimod on astrocyte functions and the astrocyte–neuron interaction. We show that human iAstrocytes expressed the receptor for the inflammatory mediator IL1 and responded to it via nuclear translocation of NFκB, an event that did not occur if cells were treated with Laquinimod, indicating a direct anti-inflammatory activity of the drug on the human astrocyte. Similarly, while exposure to IL1 downregulated glial glutamate transporters GLAST and GLT1, treatment with Laquinimod supported maintenance of physiological levels of these proteins despite the inflammatory milieu. Laquinimod also induced nuclear translocation of the aryl hydrocarbon receptor (AHR), suggesting that drug action was mediated by activation of the AHR pathway. However, the drug was effective despite AHR inhibition via CH223191, indicating that AHR signaling in the astrocyte is dispensable for drug responses. Finally, in vitro experiments with rat spinal neurons showed that laquinimod did not exert neuroprotection directly on the neuron but dampened astrocyte-induced neurodegeneration. Our findings indicate that fibroblast-derived human astrocytes represent a suitable model to study astrocyte–neuron crosstalk and demonstrate indirect, partial neuroprotective efficacy for laquinimod. [ABSTRACT FROM AUTHOR]