Mitogen-activated protein kinase phosphatases (MKPs) play key roles in inflammation and immune mediated diseases. Here we investigated the mechanisms by which MKP-2 modulates central nervous system (CNS) inflammation in experimental autoimmune encephalomyelitis (EAE). Our results show that MKP-2 mRNA levels in the spinal cord and lymphoid organs of EAE mice were increased compared with naive controls, indicating an important role for MKP-2 in EAE development. Indeed, MKP-2-/- mice developed reduced EAE severity, associated with diminished CNS immune cell infiltration, decreased proinflammatory cytokine production and reduced frequency of CD4+ and CD8+ T cells in spleens and lymph nodes. In addition, MKP-2-/- CD11c+ dendritic cells (DCs) had reduced expression of MHC-II and CD40 compared with MKP-2+/+ mice. Subsequent experiments revealed that CD4+ T cells from naïve MKP-2-/- mice had decreased cell proliferation and IL-2 and IL-17 production relative to wild type controls. Furthermore, co-culture experiments showed that bone marrow derived DCs of MKP-2-/- mice had impaired capability in antigen presentation and T cell activation. While MKP-2 also modulates macrophage activation, our study suggests that MKP-2 is essential to the pathogenic response of EAE, and it acts mainly via regulating the important antigen presenting DC function and T cell activation.