Prostaglandin (PG) E2 acts via four functionally antagonistic E-prostanoid (EP) receptors that are expressed on multiple cell types in the nervous system; these are designated EP1–4. We showed previously that EP2 null mice are protected from CD14-dependent neuronal damage in vivo following intracerebroventricular (ICV) injection of lipopolysaccharide (LPS). Clear interpretation of this neuroprotective outcome is limited because EP2 is expressed on glia and neurons. We tested the hypothesis that microglial EP2 is required for paracrine neurotoxicity following activation of innate immunity, using primary murine microglia and neuron co-cultures. We demonstrated that microglial EP2 was necessary for lipopolysaccharide (LPS)-activated microglia-mediated neurotoxicity, as well as induction of inducible nitric oxide synthase (iNOS) and cyclooxygenase 2 (COX-2). Genetic deletion of microglial iNOS, pharmacological suppression of COX-2 activity, or addition of exogenous superoxide dismutase (SOD) and catalase in the presence of EP2 also abolished neurotoxicity. This loss of paracrine neurotoxicity by EP2−/− microglia occurred in the absence of reduced cytokine levels. We conclude that microglial EP2 is critical to innate immunity-mediated paracrine damage to neurons involving COX-2 and iNOS. EP2 should be considered as a therapeutic target for suppression of microglial innate immunity-mediated damage in neurodegenerative diseases. © 2005 Wiley-Liss, Inc.