Multiple sclerosis (MS), the most common nontraumatic cause of neurologic disability in young adults in economically developed countries, is characterized by inflammation, gliosis, demyelination, and neuronal degeneration in the CNS. Bone marrow transplantation (BMT) can suppress inflammatory disease in a majority of patients with MS but retards clinical progression only in patients treated in the early stages of the disease. Here, we applied BMT in a mouse model of neuroinflammation, experimental autoimmune encephalomyelitis (EAE), and investigated the kinetics of reconstitution of the immune system in the periphery and in the CNS using bone marrow cells isolated from syngeneic donors constitutively expressing green fluorescent protein. This approach allowed us to dissect the contribution of donor cells to the turnover of resident microglia and to the pathogenesis of observed disease relapses after BMT. BMT effectively blocked or delayed EAE development when mice were treated early in the course of the disease but was without effect in mice with chronic disease. We found that there is minimal overall replacement of host microglia with donor cells in the CNS and that newly transplanted cells do not appear to contribute to disease progression. In contrast, EAE relapses are accompanied by the robust activation of endogenous microglial and macroglial cells, which further involves the maturation of endogenous Olig2 glial progenitor cells into reactive astrocytes through the cytoplasmic translocation of Olig2 and the expression of CD44 on the cellular membrane. The observed maturation of large numbers of reactive astrocytes from glial progenitors and the chronic activation of host microglial cells have relevance for our understanding of the resident glial response to inflammatory injury in the CNS. Our data indicate that reactivation of a local inflammatory process after BMT is sustained predominantly by endogenous microglia/macrophages.