Microglial cells are responsible for immune surveillance within the CNS. They respond to noxious stimuli by releasing inflammatory mediators and mounting an effective inflammatory response. This is followed by release of anti-inflammatory mediators and resolution of the inflammatory response. Alterations to this delicate process may lead to tissue damage, neuroinflammation, and neurodegeneration. Chronic pain, such as inflammatory or neuropathic pain, is accompanied by neuroimmune activation, and the role of glial cells in the initiation and maintenance of chronic pain has been the subject of increasing research over the last two decades. Neuropeptides are small amino acidic molecules with the ability to regulate neuronal activity and thereby affect various functions such as thermoregulation, reproductive behavior, food and water intake, and circadian rhythms. Neuropeptides can also affect inflammatory responses and pain sensitivity by modulating the activity of glial cells. The last decade has witnessed growing interest in the study of microglial activation and its modulation by neuropeptides in the hope of developing new therapeutics for treating neurodegenerative diseases and chronic pain. This review summarizes the current literature on the way in which several neuropeptides modulate microglial activity and response to tissue damage and how this modulation may affect pain sensitivity.