MicroRNAs are a family of regulatory molecules involved in many physiological processes, including differentiation and activation of cells of the immune system. We found that brain-specific miR-124 is expressed in microglia but not in peripheral monocytes or macrophages. When overexpressed in macrophages, miR-124 directly inhibited the transcription factor CCAAT/enhancer-binding protein-α (C/EBP-α) and its downstream target PU.1, resulting in transformation of these cells from an activated phenotype into a quiescent CD45(low), major histocompatibility complex (MHC) class II(low) phenotype resembling resting microglia. During experimental autoimmune encephalomyelitis (EAE), miR-124 was downregulated in activated microglia. Peripheral administration of miR-124 in EAE caused systemic deactivation of macrophages, reduced activation of myelin-specific T cells and marked suppression of disease. Conversely, knockdown of miR-124 in microglia and macrophages resulted in activation of these cells in vitro and in vivo. These findings identify miR-124 both as a key regulator of microglia quiescence in the central nervous system and as a previously unknown modulator of monocyte and macrophage activation.