Multiple sclerosis (MS) is a chronic neurodegenerative disease of the CNS in which an unrelenting attack from the innate and adaptive arms of the immune system results in extensive demyelination, loss of oligodendrocytes and axonal degeneration. This review summarizes advances in the understanding of the cellular and molecular pathways involved in neurodegeneration following autoimmune-mediated inflammation in the CNS. The mechanisms underlying myelin and axonal destruction and the equally important interaction between degenerative and repair mechanisms are discussed. Recent studies have revealed that the failure of CNS regeneration may be in part a result of the presence of myelin-associated growth inhibitory molecules in MS lesions. Successful therapeutic intervention in MS is likely to require suppression of the inflammatory response, in concert with blockade of growth inhibitory molecules and possibly the mobilization or transplantation of stem cells for regeneration.