Neuromyelitis optica (NMO) is an inflammatory demyelinating disease of the central nervous system caused by binding of pathogenic IgG autoantibodies (NMO-IgG) to astrocyte water channel aquaporin-4 (AQP4). Astrocyte damage and downstream inflammation require NMO-IgG effector function to initiate complement-dependent cytotoxicity (CDC) and antibody-dependent cell-mediated cytotoxicity (ADCC). Here, we evaluated the potential therapeutic utility of the bacterial enzyme IdeS (IgG-degrading enzyme of Streptococcus pyogenes), which selectively cleaves IgG antibodies to yield Fc and F(ab')(2) fragments. In AQP4-expressing cell cultures, IdeS treatment of monoclonal NMO-IgGs and NMO patient sera abolished CDC and ADCC, even when IdeS was added after NMO-IgG was bound to AQP4. Binding of NMO-IgG to AQP4 was similar to that of the NMO-F(ab')(2) generated by IdeS cleavage. NMO-F(ab')(2) competitively displaced pathogenic NMO-IgG, preventing cytotoxicity, and the Fc fragments generated by IdeS cleavage reduced CDC and ADCC. IdeS efficiently cleaved NMO-IgG in mice in vivo, and greatly reduced NMO lesions in mice administered NMO-IgG and human complement. IgG-selective cleavage by IdeS thus neutralizes NMO-IgG pathogenicity, and yields therapeutic F(ab')(2) and Fc fragments. IdeS treatment, by therapeutic apheresis or direct administration, may be beneficial in NMO.