The degenerative retinal disorders characterized by progressive cell death and exacerbating inflammation lead ultimately to blindness. The ubiquitous neuropeptide, PACAP38 is a promising therapeutic agent as its proliferative potential and suppressive effect on microglia might enable cell replacement and attenuate inflammation, respectively. Our previous finding that PACAP38 caused a marked increase of the amacrine cells in the adult (1-year-old) mouse retina, served as a rationale of the current study. We aimed to determine the proliferating elements and the inflammatory status of the PACAP38-treated retina. Three months old mice were intravitreally injected with 100 pmol PACAP38 at 3 months intervals (3X). Retinas of 1-year-old animals were dissected and effects on cell proliferation, and expression of inflammatory regulators were analyzed. Interestingly, both mitogenic and anti-mitogenic actions were detected after PACAP38-treatment. Further analysis of the mitogenic effect revealed that proliferating cells include microglia, endothelial cells, and neurons of the ganglion cell layer but not amacrine cells. Furthermore, PACAP38 stimulated retinal microglia to polarize dominantly into M2-phenotype but also might cause subsequent angiogenesis. According to our results, PACAP38 might dampen pro-inflammatory responses and help tissue repair by reprogramming microglia into an M2 phenotype, nonetheless, with angiogenesis as a warning side effect.