Multiple sclerosis (MS) is pathologically characterized by inflammatory demyelination and neuronal injury. Although phagocytosis of myelin debris by microglia and macrophages in acute MS lesions is well documented, its pathophysiological significance is unclear. Using real-time quantitative PCR, flow cytometry, ELISA, and reactive oxygen species (ROS) measurement assays, we demonstrated that phagocytosis of myelin modulates activation of microglial cells prestimulated by interferon-␥ (IFN-␥) or a combination of IFN-␥ and lipopolysaccharide with a biphasic temporal pattern, i.e., enhanced production of proinflammatory mediators during the first phase (Յ6 h), followed by suppression during the second (6 -24 h) phase. In this second phase, myelin phagocytosis leads to an enhanced release of prostaglandin E2 and ROS in microglia, whereas the production of anti-inflammatory cytokines (particularly interleukin-10) remains unchanged. Suppression of inflammatory microglial activation by myelin phagocytosis was reversed by treatment with superoxide dismutase and catalase, by inhibition of the NADPH-oxidase complex, or by specific knockdown of the NADPH-oxidase-required adaptor p47-phagocyte oxidase (PHOX). Furthermore, we observed that myelin phagocytosis destabilized tumor necrosis factor-␣ and interferon-induced protein-10 mRNA through an adenine-uridine-rich elements-involved mechanism, which was reversed by blocking the function of NADPH-oxidase complex. We conclude that phagocytosis of myelin suppresses microglial inflammatory activities via enhancement of p47-PHOX-mediated ROS generation. These results suggest that intervention in ROS generation could represent a novel therapeutic strategy to reduce neuroinflammation in MS.