Here we investigate the role of hypoxia inducible factor (HIF)-2α in coordinating the development of retinal astrocytic and vascular networks. Three Cre mouse lines were used to disrupt floxed Hif-2α, including Rosa26^CreERT2, Tie2^Cre, and GFAP^Cre. Global Hif-2α disruption by Rosa26^CreERT2 led to reduced astrocytic and vascular development in neonatal retinas, whereas endothelial disruption by Tie2^Cre had no apparent effects. Hif-2α deletion in astrocyte progenitors by GFAP^Cre significantly interfered with the development of astrocytic networks, which failed to reach the retinal periphery and were incapable of supporting vascular development. Perplexingly, the abundance of strongly GFAP⁺ mature astrocytes transiently increased at P0 before they began to lag behind the normal controls by P3. Pax2⁺ and PDGFRα⁺ astrocytic progenitors and immature astrocytes were dramatically diminished at all stages examined. Despite decreased number of astrocyte progenitors, their proliferation index or apoptosis was not altered. The above data can be reconciled by proposing that HIF-2α is required for maintaining the supply of astrocyte progenitors by slowing down their differentiation into non-proliferative mature astrocytes. HIF-2α deficiency in astrocyte progenitors may accelerate their differentiation into astrocytes, a change which greatly interferes with the replenishment of astrocyte progenitors due to insufficient time for proliferation. Rapidly declining progenitor supply may lead to premature cessation of astrocyte development. Given that HIF-2α protein undergoes oxygen dependent degradation, an interesting possibility is that retinal blood vessels may regulate astrocyte differentiation through their oxygen delivery function. While our findings support the consensus that retinal astrocytic template guides vascular development, they also raise the possibility that astrocytic and vascular networks may mutually regulate each other's development, mediated at least in part by HIF-2α.