Optic neuritis (ON), which is an acute inflammatory autoimmune demyelinating disease of the central nervous system (CNS), often occurs in multiple sclerosis (MS). ON is an early diagnostic sign in most MS patients caused by damage to the optic nerve leading to visual dysfunction. Various features of both MS and ON can be studied following induction of experimental autoimmune encephalomyelitis (EAE), an animal model of MS, in Lewis rats. Inflammation and cell death in the optic nerve, with subsequent damage to the retinal ganglion cells in the retina, are thought to correlate with visual dysfunction. Thus, characterizing the pathophysiological changes that lead to visual dysfunction in EAE animals may help develop novel targets for therapeutic intervention. We treated EAE animals with and without the calpain inhibitor calpeptin (CP). Our studies demonstrated that the Ca2+-activated neutral protease calpain was upregulated in the optic nerve following induction of EAE at the onset of clinical signs (OCS) of the disease, and these changes were attenuated following treatment with CP. These reductions correlated with decreases in inflammation (cytokines, iNOS, COX-2, and NF-κB), and microgliosis (i.e. activated microglia). We observed that calpain inhibition reduced astrogliosis (reactive astroglia) and expression of aquaporin 4 (AQP4). The balance of Th1/Th2 cytokine production and also expression of the Th1-related CCR5 and CXCR3 chemokine receptors influence many pathological processes and play both causative and protective roles in neuron damage. Our data indicated that CP suppressed cytokine imbalances. Also, Bax:Bcl-2 ratio, production of tBid, PARP-1, expression and activities of calpain and caspases, and internucleosomal DNA fragmentation were attenuated after treatment with CP. Our results demonstrated that CP decreased demyelination [loss of myelin basic protein (MBP)] and axonal damage [increase in dephosphorylated neurofilament protein (de-NFP)], and also promoted intracellular neuroprotective pathways in optic nerve in EAE rats. Thus, these data suggest that calpain is involved in inflammatory as well as in neurodegenerative aspects of the disease and may be a promising target for treating ON in EAE and MS.