Microglia, the resident immune cells of the central nervous system, mediate brain homeostasis by controlling neuronal proliferation/differentiation and synaptic activity. In response to external signals from neuropathological conditions, homeostatic (M0) microglia can adopt one of two activation states: the classical (M1) activation state, which secretes mediators of the proinflammatory response, and the alternative (M2) activation state, which presumably mediates the resolution of neuroinflammation and tissue repair/remodeling. Since chronic inflammatory activation of microglia is correlated with several neurodegenerative diseases, functional modulation of microglial phenotypes has been considered as a potential therapeutic strategy. The endocannabinoid (eCB) system, composed of cannabinoid receptors and ligands and their metabolic/biosynthetic enzymes, has been shown to activate anti-inflammatory signaling pathways that modulate immune cell functions. Growing evidence has demonstrated that endogenous, synthetic, and plant-derived eCB agonists possess therapeutic effects on several neuropathologies; however, the molecular mechanisms that mediate the anti-inflammatory effects have not yet been identified. Over the last decade, it has been revealed that the eCB system modulates microglial activation and population. In this review, we thoroughly examine recent studies on microglial phenotype modulation by eCB in neuroinflammatory and neurodegenerative disease conditions. We hypothesize that cannabinoid 2 receptor (CB2R) signaling shifts the balance of expression between neuroinflammatory (M1-type) genes, neuroprotective (M2-type) genes, and homeostatic (M0-type) genes toward the latter two gene expressions, by which microglia acquire therapeutic functionality.