Microglia are crucial for the pathogenesis of multiple sclerosis and its animal model, experimental autoimmune encephalomyelitis (EAE). Here we show that the E3 ubiquitin ligase Peli1 is abundantly expressed in microglia and promotes microglial activation during the course of EAE induction. Peli1 mediates the induction of chemokines and proinflammatory cytokines in microglia and thereby promotes recruitment of T cells into the central nervous system. The severity of EAE is reduced in Peli1-deficient mice despite their competent induction of inflammatory T cells in the peripheral lymphoid organs. Notably, Peli1 regulates Toll-like receptor (TLR) pathway signaling by promoting degradation of TNF receptor-associated factor 3 (Traf3), a potent inhibitor of mitogen-activated protein kinase (MAPK) activation and gene induction. Ablation of Traf3 restores microglial activation and CNS inflammation after the induction of EAE in Peli1-deficient mice. These findings establish Peli1 as a microglia-specific mediator of autoimmune neuroinflammation and suggest a previously unknown signaling mechanism of Peli1 function.