Traumatic spinal cord injury (SCI) elicits an acute inflammatory response which comprises numerous cell populations. It is driven by the immediate response of macrophages and microglia, which triggers activation of genes responsible for the dysregulated microenvironment within the lesion site and in the spinal cord parenchyma immediately adjacent to the lesion. Recently published data indicate that microglia induces astrocyte activation and determines the fate of astrocytes. Conversely, astrocytes have the potency to trigger microglial activation and control their cellular functions. Here we review current information about the release of diverse signaling molecules (pro-inflammatory vs. anti-inflammatory) in individual cell phenotypes (microglia, astrocytes, blood inflammatory cells) in acute and subacute SCI stages, and how they contribute to delayed neuronal death in the surrounding spinal cord tissue which is spared and functional but reactive. In addition, temporal correlation in progressive degeneration of neurons and astrocytes and their functional interactions after SCI are discussed. Finally, the review highlights the time-dependent transformation of reactive microglia and astrocytes into their neuroprotective phenotypes (M2a, M2c and A2) which are crucial for spontaneous post-SCI locomotor recovery. We also provide suggestions on how to modulate the inflammation and discuss key therapeutic approaches leading to better functional outcome after SCI.