Tumour necrosis factor is linked to the pathophysiology of various neurodegenerative disorders including multiple sclerosis. Tumour necrosis factor exists in two biologically active forms, soluble and transmembrane. Here we show that selective inhibition of soluble tumour necrosis factor is therapeutic in experimental autoimmune encephalomyelitis. Treatment with XPro1595, a selective soluble tumour necrosis factor blocker, improves the clinical outcome, whereas non-selective inhibition of both forms of tumour necrosis factor with etanercept does not result in protection. The therapeutic effect of XPro1595 is associated with axon preservation and improved myelin compaction, paralleled by increased expression of axon-specific molecules (e.g. neurofilament-H) and reduced expression of non-phosphorylated neurofilament-H which is associated with axon damage. XPro1595-treated mice show significant remyelination accompanied by elevated expression of myelin-specific genes and increased numbers of oligodendrocyte precursors. Immunohistochemical characterization of tumour necrosis factor receptors in the spinal cord following experimental autoimmune encephalomyelitis shows tumour necrosis factor receptor 1 expression in neurons, oligodendrocytes and astrocytes, while tumour necrosis factor receptor 2 is localized in oligodendrocytes, oligodendrocyte precursors, astrocytes and macrophages/microglia. Importantly, a similar pattern of expression is found in post-mortem spinal cord of patients affected by progressive multiple sclerosis, suggesting that pharmacological modulation of tumour necrosis factor receptor signalling may represent an important target in affecting not only the course of mouse experimental autoimmune encephalomyelitis but human multiple sclerosis as well. Collectively, our data demonstrate that selective inhibition of soluble tumour necrosis factor improves recovery following experimental autoimmune encephalomyelitis, and that signalling mediated by transmembrane tumour necrosis factor is essential for axon and myelin preservation as well as remyelination, opening the possibility of a new avenue of treatment for multiple sclerosis.