Macrophage migration inhibitory factor (MIF) is a multipotent cytokine that is associated with clinical worsening and relapses in multiple sclerosis (MS) patients. The mechanism through which MIF promotes MS progression remains undefined. In this study, we identify a critical role for MIF in regulating CNS effector mechanisms necessary for the development of inflammatory pathology in a mouse model of MS, experimental autoimmune encephalomyelitis (EAE). Despite the ability to generate pathogenic myelin-specific immune responses peripherally, MIF-deficient mice have reduced EAE severity and exhibit less CNS inflammatory pathology, with a greater percentage of resting microglia and fewer infiltrating inflammatory macrophages. We demonstrate that MIF is essential for promoting microglial activation and production of the innate soluble mediators IL-1β, IL-6, TNF-α, and inducible NO synthase. We propose a novel role for MIF in inducing microglial C/EBP-β, a transcription factor shown to regulate myeloid cell function and play an important role in neuroinflammation. Intraspinal stereotaxic microinjection of MIF resulted in upregulation of inflammatory mediators in microglia, which was sufficient to restore EAE-mediated inflammatory pathology in MIF-deficient mice. To further implicate a role for MIF, we show that MIF is highly expressed in human active MS lesions. Thus, these results illustrate the ability of MIF to influence the CNS cellular and molecular inflammatory milieu during EAE and point to the therapeutic potential of targeting MIF in MS.