Arsenic-induced altered microglial activity leads to neuronal death, but the causative mechanism remains unclear. The present study showed, arsenic-exposed (10 μM) microglial (N9) culture supernatant induced bystander death of neuro-2a (N2a), which was further validated with primary microglia and immature neuronal cultures. Results indicated that arsenic-induced GSH synthesis by N9 unfavorably modified the extracellular milieu for N2a by lowering cystine and increasing glutamate concentration. Similar result was observed in N9-N2a co-culture. Co-exposure of arsenic and 250 μM glutamate, less than the level (265 μM) detected in arsenic-exposed N9 culture supernatant, compromised N2a viability which was rescued by cystine supplementation. Therefore, microglia executes bystander N2a death by competitive inhibition of system Xc(-) (xCT) through extracellular cystine/glutamate imbalance. We confirmed the role of xCT in mediating bystander N2a death by siRNA inhibition studies. Ex-vivo primary microglia culture supernatant from gestationally exposed mice measured to contain lower cystine and higher glutamate compared to control and N-acetyl cysteine co-treated group. Immunofluorescence staining of brain cryosections from treated group showed more dead immature neurons with no such effect on microglia. Collectively, we showed, in presence of arsenic microglia alters cystine/glutamate balance through xCT in extracellular milieu leading to bystander death of immature neurons.