Cell renewal in the adult central nervous system (CNS) is limited, and is blocked in inflammatory brain conditions. We show that both neurogenesis and oligodendrogenesis of adult neural progenitor cells in mice are blocked by inflammation-associated (endotoxin-activated) microglia, but induced by microglia activated by cytokines (IL-4 or low level of IFN-γ) associated with T-helper cells. Blockage was correlated with up-regulation of microglial production of tumor necrosis factor-α. The effect induced by IL-4-activated microglia was mediated, at least in part, by insulin-like growth factor-I. The IL-4-activated microglia showed a bias towards oligodendrogenesis whereas the IFN-γ-activated microglia showed a bias towards neurogenesis. It thus appears that microglial phenotype critically affects their ability to support or impair cell renewal from adult stem cell.