Astrocytes strongly promote the formation and maturation of synapses by secreted proteins. To date, several astrocyte-secreted synaptogenic proteins controlling different stages of excitatory synapse development have been identified. However, the identities of astrocytic signals that induce inhibitory synapse formation remain elusive. Here, through a combination of in vitro and in vivo experiments, we identified Neurocan as an astrocyte-secreted inhibitory synaptogenic protein. Neurocan is a chondroitin sulfate proteoglycan that is best known as a protein localized to the perineuronal nets. However, Neurocan is cleaved into two after secretion from astrocytes. We found that the resulting N- and C-terminal fragments have distinct localizations in the extracellular matrix. While the N-terminal fragment remains associated with perineuronal nets, the Neurocan C-terminal fragment localizes to synapses and specifically controls cortical inhibitory synapse formation and function. Neurocan knockout mice lacking the whole protein or only its C-terminal synaptogenic region have reduced inhibitory synapse numbers and function. Through super-resolution microscopy and in vivo proximity labeling by secreted TurboID, we discovered that the synaptogenic domain of Neurocan localizes to somatostatin-positive inhibitory synapses and strongly regulates their formation. Together, our results unveil a mechanism through which astrocytes control circuit-specific inhibitory synapse development in the mammalian brain.