Astrocytes exhibit spatially-restricted near-membrane microdomain Ca2+transients in their fine processes. How these transients are generated and regulate brain function in vivo remains unclear. Here we show that Drosophila astrocytes exhibit spontaneous, activity-independent microdomain Ca2+ transients in their fine processes. Astrocyte microdomain Ca2+ transients are mediated by the TRP channel TrpML, stimulated by reactive oxygen species (ROS), and can be enhanced in frequency by the neurotransmitter tyramine via the TyrRII receptor. Interestingly, many astrocyte microdomain Ca2+ transients are closely associated with tracheal elements, which dynamically extend filopodia throughout the central nervous system (CNS) to deliver O2 and regulate gas exchange. Many astrocyte microdomain Ca2+ transients are spatio-temporally correlated with the initiation of tracheal filopodial retraction. Loss of TrpML leads to increased tracheal filopodial numbers, growth, and increased CNS ROS. We propose that local ROS production can activate astrocyte microdomain Ca2+ transients through TrpML, and that a subset of these microdomain transients promotes tracheal filopodial retraction and in turn modulate CNS gas exchange.