APOE4 is a major risk factor for sporadic Alzheimer’s disease; however, it is unclear how it exerts its pathological effects. Others and we have previously shown that autophagy is impaired in APOE4 compared to APOE3 astrocytes, and demonstrated differences in the expression of mitochondrial dynamics proteins in brains of APOE3 and APOE4 transgenic mice. Here, we investigated the effect of APOE4 expression on several aspects of mitochondrial function and network dynamics, including fusion, fission, and mitophagy, specifically in astrocytes. We found that APOE3 and APOE4 astrocytes differ in their mitochondrial dynamics, suggesting that the mitochondria of APOE4 astrocytes exhibit reduced fission and mitophagy. APOE4 astrocytes also show impaired mitochondrial function. Importantly, the autophagy inducer rapamycin enhanced mitophagy and improved mitochondrial functioning in APOE4 astrocytes. Collectively, the results demonstrate that APOE4 expression is associated with altered mitochondrial dynamics, which might lead to impaired mitochondrial function in astrocytes. This, in turn, may contribute to the pathological effects of APOE4 in Alzheimer’s disease.