Updated project metadata. Alexander disease (AxD) is a rare, severe neurodegenerative disorder caused by mutations in the glial fibrillary acidic protein (GFAP). While the exact disease mechanism remains unknown, existing studies suggest that the mutant GFAP influences many cellular processes, including cytoskeleton stability, mechanosensing, cell energetics, and proteasome function. While most studies have primarily focused on GFAP-expressing astrocytes, this protein is also expressed by radial glia and neural progenitor cells, prompting questions about the impact of GFAP mutations on central nervous system (CNS) development. In this study, we present an intriguing observation of an impaired differentiation of astrocytes and neurons in co-cultures of astrocytes and neurons, as well as in brain organoids, both generated from patient-derived induced pluripotent stem (iPS) cells with a GFAP (R239C) mutation. Leveraging single-cell RNA sequencing (scRNA-seq), we identified distinct cell populations and transcriptomic changes between the GFAP mutant cells and an isogenic corrected control. These findings are supported with immunocytochemistry and proteomics. In co-cultures, the AxD mutation resulted in an increased abundance of immature cells, while in organoids, we observed an altered cell differentiation and reduced abundance of astrocytes. Additionally, gene expression analysis associated the AxD mutation with increased stress susceptibility, cytoskeletal abnormalities, and altered extracellular matrix and cell-cell communication patterns. Overall, our results suggest the possibility of a faulty differentiation in human iPS cell-derived models of AxD, opening new avenues for AxD research.