Tissue plasminogen activator mediates excitotoxin-induced neurodegeneration and microglial activation in the mouse hippocampus. Here we show that tissue plasminogen activator (tPA) acts in a protease-independent manner to modulate the activation of microglia, the cells of the central nervous system with macrophage properties. Cultured microglia from tPA-deficient mice can phagocytose as efficiently as wild-type microglia. However, tPA-deficient microglia in mixed cortical cultures exhibit attenuated activation in response to lipopolysaccharide, as judged by morphological changes, increased expression of the activation marker F4/80 and the release of the pro-inflammatory cytokine tumor necrosis factor-α. When tPA is added to tPA deficient cortical cultures prior to endotoxin stimulation, microglial activation is restored to levels comparable to that observed in wild-type cells. Proteolytically-inactive tPA can also restore activation of tPA-deficient microglia in culture and in vivo. However, this inactive enzyme does not restore susceptibility of tPA-deficient hippocampal neurons to excitotoxin-mediated cell death. These results dissociate two different functions of tPA: inactive enzyme can mediate microglial activation, whereas proteolytically-competent protein also promotes neuronal degeneration. Thus tPA is identified as a new cytokine in the central nervous system.