The cell surface heparan sulfate proteoglycan, syndecan-1, has been reported to be a negative regulator of various inflammatory processes, but its precise mode of action is poorly defined. In this study, we use the murine model of the 35–55 peptide of myelin oligodendrocyte glycoprotein–induced experimental autoimmune encephalomyelitis (EAE), a T lymphocyte–mediated inflammation where the steps in disease development and recovery are well characterized, to decipher how syndecan-1 impacts on the inflammatory reaction. Syndecan-1 knockout (Sdc-1−/−) mice show enhanced disease severity and impaired recovery. The use of bone marrow chimeric mice reveals that both an immune cell and a CNS-resident source of syndecan-1 contribute to this phenotype. Epithelial cells of the choroid plexus, where initial CCL20-induced leukocyte recruitment to the brain occurs, are identified as the predominant site of syndecan-1 expression. Syndecan-1 is lost from this site during the course of EAE by shedding into the cerebrospinal fluid, which correlates with loss of epithelial cell surface–bound CCL20 and is associated with the upregulation of IL-6 expression. In Sdc-1−/− mice, early leukocyte recruitment via the choroid plexus is enhanced, and IL-6 is elevated, which collectively results in higher numbers of the disease inducing Th17 cells in the CNS, thereby contributing to enhanced disease severity. Furthermore, Sdc-1−/− mice have intrinsically elevated plasma cell numbers and higher myelin oligodendrocyte glycoprotein–specific Ab levels during EAE, which we propose contributes to impaired recovery. Our data identify the choroid plexus epithelium as a novel source of IL-6 in EAE and demonstrate that its expression negatively correlates with syndecan-1 expression at this site.