Microglial cells are non-professional antigen-presenting cells (APC) the function of which is still controversial. Here, we studied the function of microglia derived from H-2(u) mice. We show that these microglia express a low level of B7.2 and CD40 and, interestingly, lack surface expression of B7.1. Resting and IFN-gamma-activated microglia were unable to activate naive and primed myelin basic protein (MBP)-specific CD4(+) T cells in the presence of MBP and encephalomyelitic MBP Ac1-11 peptide. Furthermore, in the presence of Ac1-11 peptide, CD4(+) TCR-transgenic T cells became anergized. Microglia became professional APC only after a multistep activation process involving both stimulation through cytokines [granulocyte-macrophage colony-stimulating factor (GM-CSF) and IFN-gamma] and cognate signaling (B7-CD28 and CD40-CD40 ligand interactions). As such they were able to present MBP to both unprimed and primed T cells. Co-culture of microglia with GM-CSF up-regulated co-stimulatory molecules, in particular B7.1. Additional activation with IFN-gamma induced MHC class II and CD40 up-regulation. CD40-CD40 ligand interaction significantly enhanced microglial ability to prime TCR-transgenic T cells and was essential for presentation of MBP to in vivo primed non-transgenic T cells. We propose that microglia may serve different functions under different inflammatory conditions, depending on the cytokine milieu and the type of cognate interaction they are involved in.