Leukocyte common antigen-related protein tyrosine phosphatase (LAR) is a member of the protein tyrosine phosphatase family that serves as a key regulator of cellular survival. It is also involved in neurodevelopment and brain disorders. This study was designed to investigate the role of LAR in a cell-based model of Parkinson’s disease (PD) in which U251 and SH-SY5Y cells were used as models of astrocytes and dopaminergic neurons, respectively. Cell viability, cell death, cell morphology, protein phosphorylation and expression, ATP levels, reactive oxygen species (ROS) generation, and mitochondrial membrane potential were analyzed in the wild-type (WT) and heterozygous LAR-knockout astrocytoma U251 cells to assess the cell state, signal transduction, and mitochondrial function. LAR downregulation showed a protective effect in rotenone-exposed U251 cells by increasing cell viability, reducing cell mortality, and restoring appropriate cellular morphology. LAR downregulation enhanced IGF-1R phosphorylation and downstream signal transduction as evidenced by increases in the Akt and GSK-3β phosphorylation, as well as the upregulation of NRF2 and HO-1. The downregulation of LAR also augmented DJ-1 levels in these cells. The enhanced Akt and GSK-3β phosphorylation contributed to a reduced Bax/Bcl2 ratio and suppressed apoptosis after rotenone exposure. Heterozygous LAR-knockout U251 cells exhibited higher mitochondrial function evidenced by increased mitochondrial membrane potential, ATP contents, and reduced ROS production compared to the WT cells following rotenone exposure. Further studies showed that the astrocytic protection mediated by the heterozygous knockout of LAR was associated with the activation of Akt. A specific Akt inhibitor, MK2206, reduced the cell viability, Akt and GSK3β phosphorylation, and HO-1 and NRF2 expression in U251 cells exposed to rotenone. Astrocytes provide structural and metabolic support to maintain neuronal health. Astrocytic glial cell-derived neurotrophic factor (GDNF) production is vital for dopaminergic neuron survival. Heterozygous LAR-knockout U251 cells produced higher amounts of GDNF than the WT cells. The SH-SY5Y cells cocultured with heterozygous LAR-knockout U251 cells exhibited greater viability than that of cells cocultured with WT U251 cells in response to rotenone. Together, these findings demonstrate that the heterozygous knockout of LAR in astrocytes can play a key role in protecting both astrocytic cells and cocultured neurons in a rotenone-induced cell-based model of PD. This neuroprotective effect is attributable to the augmentation of IGF1R-Akt-GDNF signaling and the maintenance of astrocytic mitochondrial function.