Intraperitoneal injection of the Gram-negative bacterial endotoxin lipopolysaccharide (LPS) elicits a rapid innate immune response. While this systemic inflammatory response can be destructive, tolerable low doses of LPS render the brain transiently resistant to subsequent injuries. However, the mechanism by which microglia respond to LPS stimulation and participate in subsequent neuroprotection has not been documented. In this study, we first established a novel LPS treatment paradigm where mice were injected intraperitoneally with 1.0 mg/kg LPS for four consecutive days to globally activate CNS microglia. By using a reciprocal bone marrow transplantation procedure between wild-type and Toll-like receptor 4 (TLR4) mutant mice, we demonstrated that the presence of LPS receptor (TLR4) is not required on hematogenous immune cells but is required on cells that are not replaced by bone marrow transplantation, such as vascular endothelia and microglia, to transduce microglial activation and neuroprotection. Furthermore, we showed that activated microglia physically ensheathe cortical projection neurons, which have reduced axosomatic inhibitory synapses from the neuronal perikarya. In line with previous reports that inhibitory synapse reduction protects neurons from degeneration and injury, we show here that neuronal cell death and lesion volumes are significantly reduced in LPS-treated animals following experimental brain injury. Together, our results suggest that activated microglia participate in neuroprotection and that this neuroprotection is likely achieved through reduction of inhibitory axosomatic synapses. The therapeutic significance of these findings rests not only in identifying neuroprotective functions of microglia, but also in establishing the CNS location of TLR4 activation.