Inflammation in the central nervous system (CNS) may occur as a result of trauma, infection or neurodegenerative stimuli and is characterized by activation of microglia, the resident immune cells of the CNS. Activated microglia proliferate rapidly, migrate to the site of injury or infection and elicit immune response by phagocytosis of cell debris, production of cytokines, chemokines and reactive oxygen species, and presentation of antigens to other immune cells. In addition, microglia participate in tissue repair by producing neurotrophic factors. However, when microglia are chronically activated, they become neurotoxic to the surrounding CNS parenchyma. Chronic activation of microglia has been shown to augment neurodegeneration in Parkinson's disease (PD), Alzheimer's disease (AD), brain injury and number of other CNS pathologies. Identification of factors that control microglial activation, therefore, has become the major focus of recent research. A number of herbal and chemical compounds have been shown to attenuate microglial activation. However, these compounds exhibit non-specificity and produce unpleasant side-effects. Here, we provide a comprehensive review on some of the currently available drugs known to reduce microglial activation, their molecular targets and the subcellular signaling networks on which they act. We also review some of the newly emerging therapeutic avenues such as 'epidrugs' and finally emphasize on the importance of targeted drug delivery systems for alleviating microglia-mediated neurotoxicity.