Recent evidence suggests that the oral drug Fingolimod (FTY720) for relapsing-remitting multiple sclerosis (MS) may act directly on the central nervous system (CNS) and modulate disease pathogenesis and progression in experimental models of MS. However, the specific subtype of sphingosine-1-phosphate (S1P) receptors that mediates the effect of FTY720 on the CNS cells has not been fully elucidated. Here, we report that S1P receptor 1 (S1PR1) is elevated in reactive astrocytes in an autoimmunity independent mouse model of MS and that selective S1PR1 modulation is sufficient to ameliorate the loss of oligodendrocytes and demyelination. The non-selective S1PR modulator, FTY720, or a short-lived S1PR1-specific modulator, CYM5442, was administered daily to mice while on cuprizone diet. Both FTY720- and CYM5422-treated mice displayed a significant reduction in oligodendrocyte apoptosis and astrocyte and microglial activation in comparison to vehicle-treated groups, which was associated with decreased production of proinflammatory mediators and down-regulation of astrocytic S1PR1 protein. Interestingly, S1PR1 modulation during the early phase of cuprizone intoxication was required to suppress oligodendrocyte death and consequent demyelination as drug treatment from 10 days after the initiation of cuprizone feeding was no longer effective. CYM5442 treatment during the brief cuprizone exposure significantly prevented Il-1β, Il-6, Cxcl10, and Cxcl3 induction, resulting in suppression of subsequent reactive gliosis and demyelination. Our study identifies functional antagonism of S1PR1 as a major mechanism for the protective effect of FTY720 in the cuprizone model and suggests pathogenic contributions of astrocyte S1PR1 signaling in primary demyelination and its potential as a therapeutic target for CNS inflammation.