Over the last three decades it has become increasingly clear that monocytes, originally thought to have fixed, stereotypic responses to foreign stimuli, mediate exquisitely balanced protective and pathogenic roles in disease and immunity. This balance is crucial in core functional organs, such as the central nervous system (CNS), where minor changes in neuronal microenvironments and the production of immune factors can result in significant disease with fatal consequences or permanent neurological sequelae. Viral encephalitis and multiple sclerosis are examples of important human diseases in which the pathogenic contribution of monocytes recruited from the bone marrow plays a critical role in the clinical expression of disease, as they differentiate into macrophage or dendritic cells in the CNS to carry out effector functions. While antigen-specific lymphocyte populations are central to the adaptive immune response in both cases, in viral encephalitis a prominent macrophage infiltration may mediate immunopathological damage, seizure induction, and death. However, the autoimmune response to non-replicating, non-infectious, but abundant, self antigen has a different disease progression, associated with differentiation of significant numbers of infiltrating monocytes into dendritic cells in the CNS. Whilst a predominant presence of macrophages or dendritic cells in the inflamed CNS in viral encephalitis or multiple sclerosis is well described, the way in which the inflamed CNS mobilizes monocytes in the bone marrow to migrate to the CNS and the key drivers that lead to these specific differentiation pathways in vivo are not well understood. Here we review the current understanding of factors facilitating inflammatory monocyte generation, migration and entry into the brain, as well as their differentiation towards macrophages or dendritic cells in viral and autoimmune disease in relation to their respective disease outcomes.