The causes of grey matter pathology and diffuse neuron injury in MS remain incompletely understood. Axonal stress signals arising from white matter lesions has been suggested to play a role in initiating this diffuse grey matter pathology. Therefore, to identify the most upstream transcriptional responses in neurons arising from demyelinated axons, we analyzed the transcriptome of actively translating neuronal transcripts in mouse models of demyelinating disease. Among the most upregulated genes, we identified transcripts associated with the ISGylation pathway. ISGylation refers to the covalent attachment of the ubiquitin-like molecule interferon stimulated gene (ISG) 15 to lysine residues on substrates targeted by E1 ISG15-activating enzyme, E2 ISG15-conjugating enzymes and E3 ISG15-protein ligases. We further confirmed that ISG15 expression is increased in MS cortical and deep gray matter. Upon investigating the functional impact of neuronal ISG15 upregulation, we noted that ISG15 expression was associated changes in neuronal extracellular vesicle protein and miRNA cargo. Specifically, extracellular vesicle-associated miRNAs were skewed toward increased frequency of proinflammatory and neurotoxic miRNAs and decreased frequency of anti-inflammatory and neuroprotective miRNAs. Furthermore, we found that ISG15 directly activated microglia in a CD11b-dependent manner and that microglial activation was potentiated by treatment with EVs from neurons expressing ISG15. Further study of the role of ISG15 and ISGylation in neurons in MS and neurodegenerative diseases is warranted.