Mucopolysaccharidosis type II (MPSII) is a lysosomal storage disorder due to the deficit of the iduronate 2-sulfatase (IDS) enzyme, causing progressive neurodegeneration in patients. Neural stem cells (NSCs) derived from the IDS-ko mouse can recapitulate MPSII pathogenesis in vitro. In differentiating IDS-ko NSCs and in the aging IDS-ko mouse brain, glial degeneration precedes neuronal degeneration. Here we show that pure IDS-ko NSC-derived astrocytes are selectively able to drive neuronal degeneration when cocultured with healthy neurons. This phenotype suggests concurrent oxidative damage with metabolic dysfunction. Similar patterns were observed in murine IDS-ko animals and in human MPSII brains. Most importantly, the mutant phenotype of IDS-ko astrocytes was reversed by low oxygen conditions and treatment with vitamin E, which also reversed the toxic effect on cocultured neurons. Moreover, at very early stages of disease we detected in vivo the development of a neuroinflammatory background that precedes astroglial degeneration, thus suggesting a novel model of MPSII pathogenesis, with neuroinflammation preceding glial degeneration, which is finally followed by neuronal death. This hypothesis is also consistent with the progression of white matter abnormalities in MPSII patients. Our study represents a novel breakthrough in the elucidation of MPSII brain pathogenesis and suggests the antioxidant molecules as potential therapeutic tools to delay MPSII onset and progression.