There is accumulating evidence that intracellular and extracellular proteases of microglia contribute to various events in the central nervous system (CNS) through both nonspecific and limited proteolysis. Cathepsin E and cathepsin S, endosomal/lysosomal proteases, have been shown to play important roles in the major histocompatibility complex (MHC) class II-mediated antigen presentation of microglia by processing of exogenous antigens and degradation of the invariant chain associated with MHC class II molecules, respectively. Some members of cathepsins are also involved in neuronal death after secreted from microglia and clearance of phagocytosed amyloid- beta peptides. Tissue-type plasminogen activator, a serine protease, secreted from microglia participates in neuronal death, enhancement of N-methyl-D-aspartate receptor-mediated neuronal responses, and activation of microglia via either proteolytic or nonproteolytic activity. Calpain, a calcium-dependent cysteine protease, has been shown to play a pivotal role in the pathogenesis of multiple sclerosis by degrading myelin proteins extracellulary. Furthermore, matrix metalloproteases secreted from microglia also receive great attention as mediators of inflammation and tissue degradation through processing of pro-inflammatory cytokines and damage to the blood-brain barrier. The growing knowledge about proteolytic events mediated by microglial proteases will not only contribute to better understanding of microglial functions in the CNS but also may aid in the development of protease inhibitors as novel neuroprotective agents.