The disease mechanism of Rett syndrome (RTT) is not well understood. Studies in RTT mouse models have suggested a non-cell-autonomous role for astrocytes in RTT pathogenesis. However, it is not clear whether this is also true for human RTT astrocytes. To establish an in vitro human RTT model, we previously generated isogenic induced pluripotent stem cell (iPSC) lines from several RTT patients carrying different disease-causing mutations. Here, we show that these RTT iPSC lines can be efficiently differentiated into astroglial progenitors and glial fibrillary acidic protein-expressing (GFAP(+)) astrocytes that maintain isogenic status, that mutant RTT astrocytes carrying three different RTT mutations and their conditioned media have adverse effects on the morphology and function of wild-type neurons and that the glial effect on neuronal morphology is independent of the intrinsic neuronal deficit in mutant neurons. Moreover, we show that both insulin-like growth factor 1 (IGF-1) and GPE (a peptide containing the first 3 amino acids of IGF-1) are able to partially rescue the neuronal deficits caused by mutant RTT astrocytes. Our findings confirm the critical glial contribution to RTT pathology, reveal potential cellular targets of IGF-1 therapy and further validate patient-specific iPSCs and their derivatives as valuable tools to study RTT disease mechanism.