Astrocytes are the most numerous cell type in the brain, and their physiological roles are essential for normal brain function. Studies of post-mortem brain tissue samples from individuals with AIDS have revealed that a small proportion of astrocytes are infected by HIV-1 which is linked to the development of HIV-associated dementia (HIVD), a frequent clinical manifestation of HIV-1 disease affecting up to 20% of infected adults. However, astrocyte infection by HIV-1 in vivo is generally non-productive, and can only be readily detected by sensitive techniques that detect HIV-1 RNA or proviral DNA. Similarly, primary astrocyte cultures and astrocytic cell lines can be permissive to infection by HIV-1 strains, but are refractory to efficient HIV-1 expression. In efforts to delineate the molecular mechanisms underlying the "restricted" infection, several studies have demonstrated that efficient HIV-1 replication is blocked in astrocytes at different steps of the virus life cycle, including virus entry, reverse transcription, nucleocytoplasmic HIV-1 RNA transport, translation of viral RNA, and maturation of progeny virions. However, the relative importance of each of these possible replication blocks in restricting HIV-1 replication in astrocytes is unclear. Moreover, how restricted astrocyte infection contributes to the development of HIVD is unknown. This review surveys the current in vitro models of restricted HIV-1 replication in astrocytes, and provides an analysis of the available evidence supporting a role for astrocyte infection in the pathogenesis of HIVD. A greater understanding of the fate of HIV-1 in astrocytes may assist in the identification of viral reservoirs in the central nervous system, novel therapies for the treatment of HIVD, and also novel strategies to suppress HIV-1 replication in CD4+ cells of the immune system.