A disaccharide degradation product of chondrotin sulfate proteoglycan-disaccharide (CSPG-DS) has been implicated previously in the inhibition of neurodegeneration by influencing microglia activation. In this study, genome-wide microarray analysis was used to identify specific gene expression profiles of CSPG-DS-stimulated BV-2 microglia-like cells. Gene products involved in phagocytosis, detoxification, migration, immune regulation, and antigen presentation were found to be altered significantly. These findings were replicated and compared with IFN-gamma-stimulated primary microglia using real-time quantitative RT-PCR validation. Importantly, a unique transcriptional phenotype with anti-inflammatory and IFN-gamma counter-regulatory properties partially related to alternatively activated macrophages was identified. Using functional cell assays, we found that CSPG-DS-stimulated microglia possess increased phagocytic capacity but lack direct cytotoxic effects such as secretion of NO. Furthermore, conditioned media from CSPG-DS-treated microglia did not diminish the viability or cause apoptosis of cultured photoreceptor cells and partially rescued these cells from IFN-gamma-induced apoptosis. Taken together, our data provide a unique transcript dataset and important in vitro findings about the functional properties of CSPG-DS-activated microglia. These might be starting points to explore the in vivo role of CSPG-DS as a bioactive microglia regulator and its potential, therapeutic application in immune-related, neurodegenerative disorders.