Multiple sclerosis (MS) is a demyelinating autoimmune disease mediated by infiltration of T cells into the central nervous system after compromise of the blood-brain barrier. We have previously shown that administration of tuftsin, a macrophage/microglial activator, dramatically improves the clinical course of experimental autoimmune encephalomyelitis (EAE), a well-established animal model for MS. Tuftsin administration correlates with upregulation of the immunosuppressive Helper-2 T cell (Th2) cytokine transcription factor GATA-3. We now show that tuftsin-mediated microglial activation results in shifting microglia to an anti-inflammatory phenotype. Moreover, the T cell phenotype is shifted towards immunoprotection after exposure to tuftsin-treated activated microglia; specifically, downregulation of pro-inflammatory Th1 responses is triggered in conjunction with upregulation of Th2-specific responses and expansion of immunosuppressive regulatory T cells (Tregs). Finally, tuftsin-shifted T cells, delivered into animals via adoptive transfer, reverse the pathology observed in mice with established EAE. Taken together, our findings demonstrate that tuftsin decreases the proinflammatory environment of EAE and may represent a therapeutic opportunity for treatment of MS.