Following peripheral nerve injury, extracellular ATP-mediated purinergic signaling is crucial for spinal cord microglia activation and neuropathic pain. However, the mechanisms of ATP release remain poorly understood. Here, we show that volume-regulated anion channel (VRAC) is an ATP-releasing channel and is activated by inflammatory mediator sphingosine-1-phosphate (S1P) in microglia. Mice with microglia-specific deletion of Swell1 (also known as Lrrc8a), a VRAC essential subunit, had reduced peripheral nerve injury-induced increase in extracellular ATP in spinal cord. The mutant mice also exhibited decreased spinal microgliosis, dorsal horn neuronal hyperactivity, and both evoked and spontaneous neuropathic pain-like behaviors. We further performed high-throughput screens and identified an FDA-approved drug dicumarol as a novel and potent VRAC inhibitor. Intrathecal administration of dicumarol alleviated nerve injury-induced mechanical allodynia in mice. Our findings suggest that ATP-releasing VRAC in microglia is a key spinal cord determinant of neuropathic pain and a potential therapeutic target for this debilitating disease.