The concerted release of neuromodulators, including norepinephrine, acetylcholine, histamine, dopamine, and orexin mediates arousal. All of these neuromodulators individually alter the membrane properties, spiking activity, and intracellular signaling pathways of subpopulations of neurons and glia, but how they implement the striking stereotypic patterns of EEG activity characterizing wakefulness versus sleep is not understood. We have in recent work found astrocytes play an unexpected important role in modulating the state of brain activity. In response to neuromodulators and in particular, norepinephrine, astrocytes control the extracellular ion concentrations. In turn, the changes in extracellular K+, Ca2+, and Mg2+ appears to play a crucial role in shaping the changes in EEG activity that characterize the sleep-wake cycle. Concurrently, astrocytes control the glymphatic clearance system, which is primarily active during sleep. The seminar will discuss the interconnections between astrocytic regulation of ion and water homeostasis in the context of the state of brain activity.