Activation of microglia has been emphasized as a critical step in the pathophysiology of degenerative and inflammatory processes of the CNS. Activated microglia release low molecular weight compounds, such as excitatory amino acids, that are directly toxic to neurons. Here we demonstrate that a microglia-derived cytokine, transforming growth factor-beta 1, directly alters the susceptibility of neurons to glutamate-induced cell damage. Transforming growth factor-beta 1 acts as a neuroprotectant following short-term exposure to glutamate, whereas, following chronic exposure to glutamate, similar concentrations of transforming growth factor-beta 1 actually potentiate excitotoxic cell death. This complex interaction may play an important role in determining the extent of local tissue damage.