Translocator protein 18 kDa (TSPO) is a mitochondrial outer membrane protein. Although TSPO expression is up-regulated during neuroinflammation, the role of TSPO and its signaling mechanisms in regulation of neuroinflammation remains to be elucidated at the molecular level. Here we demonstrate that TSPO is a negative regulator of neuroinflammation in microglia. Over-expression of TSPO decreased production of pro-inflammatory cytokines upon lipopolysaccharide treatment while TSPO knock-down had the opposite effect. Anti-inflammatory activity of TSPO is also supported by increased expression of alternatively activated M2 stage-related genes. These data suggest that up-regulation of TSPO level during neuroinflammation may be an adaptive response mechanism. We also provide the evidence that the repressive activity of TSPO is at least partially mediated by the attenuation of NF-kappaB activation. Neurodegenerative diseases are characterized by loss of specific subsets of neurons at the particular anatomical regions of the central nervous system. Cause of neuronal death is still largely unknown, but it is becoming clear that neuroinflammation plays a significant role in the pathophysiology of neurodegenerative diseases. Understanding the mechanisms underlying the inhibitory effects of TSPO on neuroinflammation can contribute to the therapeutic design for neurodegenerative diseases.