The discovery that transient elevations of calcium concentration occur in astrocytes, and release 'gliotransmitters' which act on neurons and vascular smooth muscle, led to the idea that astrocytes are powerful regulators of neuronal spiking, synaptic plasticity and brain blood flow. These findings were challenged by a second wave of reports that astrocyte calcium transients did not mediate functions attributed to gliotransmitters and were too slow to generate blood flow increases. Remarkably, the tide has now turned again: the most important calcium transients occur in fine astrocyte processes not resolved in earlier studies, and new mechanisms have been discovered by which astrocyte [Ca(2+)]i is raised and exerts its effects. Here we review how this third wave of discoveries has changed our understanding of astrocyte calcium signaling and its consequences for neuronal function.