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Lesions of the central nervous system elicit inflammatory responses that counteract the regeneration of neurites. Microglia and infiltrating macrophages that were activated by trauma have been identified as cellular sources of inhibitory factors. We examine cultured macrophage (RAW264.7) and neuronal (PC12) cell lines to ascertain the potential modulators of the inflammatory impact on neurons. By exposing quiescent macrophages to lipopolysaccharide (LPS) and interferon γ (IFN-γ), cells can be transformed into an activated M1 phenotype. Neurite extension was induced in PC12 cells by culturing them in the presence of nerve growth factor. Neurite outgrowth was quantified by analyzing immunofluorescence and phase contrast microscopy images. Activated macrophages significantly reduced neurite extension. Macrophage activation by LPS/IFN-γ induced a 1000-fold increase in tumor necrosis factor alpha (TNF-α) secretion, as quantified by enzyme-linked immunosorbent assays (ELISA). Recombinant TNF-α inhibited neurite formation at concentrations as low as 0.016 ng/ml. In contrast, the masking of TNF-α with specific functional antibodies abrogated neurite growth inhibition by activated macrophages. Taken together, these results indicated that TNF-α is a key component of inhibitory macrophage action. The transfection of PC12 neurons with microRNA-124 (miR-124) counteracted the inhibition of neurites mediated by both recombinant TNF-α and macrophages. miR-124 did not stimulate neurite formation per se, nor was cell viability affected. These data suggest that miR-124 might be a valuable tool for desensitizing neurons to a repulsive inflammatory environment.