Microglia serve as the innate immune cells of the central nervous system (CNS) by providing continuous surveillance of the CNS microenvironment and initiating defense mechanisms to protect CNS tissue. Upon injury, microglia transition into an activated state altering their transcriptional profile, transforming their morphology, and producing pro-inflammatory cytokines. These activated microglia initially serve a beneficial role, but their continued activation drives neuroinflammation and neurodegeneration. Multiple sclerosis (MS) is a chronic, inflammatory, demyelinating disease of the CNS, and activated microglia and macrophages play a significant role in mediating disease pathophysiology and progression. Colony-stimulating factor-1 receptor (CSF1R) and its ligand CSF1 are elevated in CNS tissue derived from MS patients. We performed a large-scale RNA-sequencing experiment and identified CSF1R as a key node of disease progression in a mouse model of progressive MS. We hypothesized that modulating microglia and infiltrating macrophages through the inhibition of CSF1R will attenuate deleterious CNS inflammation and reduce subsequent demyelination and neurodegeneration. To test this hypothesis, we generated a novel potent and selective small-molecule CSF1R inhibitor (sCSF1Rinh) for preclinical testing. sCSF1Rinh blocked receptor phosphorylation and downstream signaling in both microglia and macrophages and altered cellular functions including proliferation, survival, and cytokine production. In vivo, CSF1R inhibition with sCSF1Rinh attenuated neuroinflammation and reduced microglial proliferation in a murine acute LPS model. Furthermore, the sCSF1Rinh attenuated a disease-associated microglial phenotype and blocked both axonal damage and neurological impairments in an experimental autoimmune encephalomyelitis (EAE) model of MS. While previous studies have focused on microglial depletion following CSF1R inhibition, our data clearly show that signaling downstream of this receptor can be beneficially modulated in the context of CNS injury. Together, these data suggest that CSF1R inhibition can reduce deleterious microglial proliferation and modulate microglial phenotypes during neuroinflammatory pathogenesis, particularly in progressive MS.