Activation of microglia and inflammation-mediated neurotoxicity are believed to play an important role in the pathogenesis of several neurodegenerative disorders, including multiple sclerosis. Studies demonstrate complex functions of activated microglia that can lead to either beneficial or detrimental outcomes, depending on the form and the timing of activation. Combined with genetic and environmental factors, overactivation and dysregulation of microglia cause progressive neurotoxic consequences which involve a vicious cycle of neuron injury and unregulated neuroinflammation. Thus, modulation of microglial activation appears to be a promising new therapeutic target. While current therapies do attempt to block activation of microglia, they indiscriminately inhibit inflammation thus also curbing beneficial effects of inflammation and delaying recovery. Multiple signaling cascades, often cross-talking, are involved in every step of microglial activation. One of the key challenges is to understand the molecular mechanisms controlling cytokine expression and phagocytic activity, as well as cell-specific consequences of dysregulated cytokine expression. Further, a better understanding of how the integration of multiple cytokine signals influences the function or activity of individual microglia remains an important research objective to identify potential therapeutic targets for clinical intervention to promote repair.