Damage to oligodendrocyte (OL) progenitor cells (OPCs) and hypomyelination are two hallmark features of periventricular leukomalacia (PVL), the most common form of brain damage in premature infants. Clinical and animal studies have linked the incidence of PVL to maternal infection/inflammation, and activated microglia have been proposed to play a central role. However, the precise mechanism of how activated microglia adversely affects the survival and development of OPCs is still not clear. Here we demonstrate that lipopolysaccharide (LPS)-activated microglia are deleterious to OPCs, that is, impeding OL lineage progression, reducing the production of myelin basic protein (MBP), and mediating OPC death. We further demonstrate that LPS-activated microglia mediate OPC death by two distinct mechanisms in a time-dependent manner. The early phase of cell damage occurs within 24 h after LPS treatment, which is mediated by nitric oxide (NO)-dependent oxidative damage and is prevented by N(G)-nitro-l-arginine methyl ester (l-NAME), a general inhibitor of nitric oxide synthase. The delayed cell death is evident at 48 h after LPS treatment, is mediated by cytokines, and is prevented by blocking the activity of tumor necrosis factor-alpha (TNF-alpha) and pro-nerve growth factor (proNGF), but not by l-NAME. Furthermore, microglia-derived insulin-like growth factor-1 (IGF-1) and ciliary neurotrophic factor (CNTF) were significantly suppressed by LPS, and exogenous IGF-1 and CNTF synergistically protected OLs from death induced by LPS-treated microglia conditioned medium, indicating that a deficiency in trophic support may also be involved in OL death. Our finding that LPS-activated microglia not only induce two waves of cell death but also greatly impair OL development may shed some light on the mechanisms underlying selective white matter damage and hypomyelination in PVL.