The neuromodulator adenosine regulates immune activation and neuronal survival through specific G-protein-coupled receptors expressed on macrophages and neurons, including the A1 adenosine receptor (A1AR). Here we show that A1AR null (A1AR Ϫ/Ϫ ) mice developed a severe progressive-relapsing form of experimental allergic encephalomyelitis (EAE) compared with their wild-type (A1AR ϩ/ϩ ) littermates. Worsened demyelination, axonal injury, and enhanced activation of microglia/macrophages were observed in A1AR Ϫ/Ϫ animals. In addition, spinal cords from A1AR Ϫ/Ϫ mice demonstrated increased proinflammatory gene expression during EAE, whereas anti-inflammatory genes were suppressed compared with A1AR ϩ/ϩ animals. Macrophages from A1AR Ϫ/Ϫ animals exhibited increased expression of the proinflammatory genes, interleukin-1, and matrix metalloproteinase-12 on immune activation when matched with A1AR ϩ/ϩ control cells. A1AR Ϫ/Ϫ macrophage-derived soluble factors caused significant oligodendrocyte cytotoxicity compared with wild-type controls. The A1AR was downregulated in microglia in A1AR ϩ/ϩ mice during EAE accompanied by neuroinflammation, which recapitulated findings in multiple sclerosis (MS) patients. Caffeine treatment augmented A1AR expression on microglia, with ensuing reduction of EAE severity, which was further enhanced by concomitant treatment with the A1AR agonist, adenosine amine congener. Thus, modulation of neuroinflammation by the A1AR represents a novel mechanism that provides new therapeutic opportunities for MS and other demyelinating diseases.